<PAGE>
BANKAMERICA CORPORATION ANALYTICAL REVIEW AND FORM 10-Q
[BANKAMERICA CORPORATION LOGO APPEARS HERE]
1995
3rd Quarter
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 1-7377
Exact name of registrant as specified in its charter:
BankAmerica Corporation
State or other jurisdiction of incorporation or organization:
Delaware
I.R.S. Employer Identification Number:
94-1681731
Address of principal executive offices:
Bank of America Center
San Francisco, California 94104
Registrant's telephone number, including area code:
415-622-3530
Former name, former address, and former fiscal year,
if changed since last report:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $1.5625 par value ------ 369,997,722 shares outstanding on
September 30, 1995.*
*In addition, 13,956,896 shares were held in treasury.
================================================================================
This document serves both as an analytical review for analysts, shareholders,
and other interested persons, and as the quarterly report on Form 10-Q of
BankAmerica Corporation to the Securities and Exchange Commission, which has
taken no action to approve or disapprove the report or to pass upon its accuracy
or adequacy. Additionally, this document is to be read in conjunction with the
consolidated financial statements and notes thereto included in BankAmerica
Corporation's Annual Report on Form 10-K for the year ended December 31, 1994.
<PAGE>
CONTENTS
<TABLE>
============================================================================================
<S> <C>
PART I Item 1.
FINANCIAL Financial Statements:
INFORMATION Consolidated Statement of Operations........................... 2
Consolidated Balance Sheet..................................... 3
Consolidated Statement of Cash Flows........................... 4
Consolidated Statement of Changes in Stockholders' Equity...... 5
Notes to Consolidated Financial Statements..................... 6
Item 2.
Management's Discussion and Analysis:
Highlights..................................................... 16
Business Sectors............................................... 18
Results of Operations:
Net Interest Income.......................................... 21
Noninterest Income........................................... 24
Noninterest Expense.......................................... 25
Income Taxes................................................. 26
Balance Sheet Review........................................... 27
Credit Risk Management:
Loan Portfolio Management.................................... 29
Domestic Consumer Loans.................................... 30
Domestic Commercial Loans.................................. 31
Foreign Loans.............................................. 32
Emerging Market Exposure..................................... 32
Allowance for Credit Losses.................................. 34
Nonperforming Assets......................................... 36
Foreign Exchange and Derivatives Contracts..................... 39
Interest Rate Risk Management.................................. 40
Funding and Capital:
Liquidity Review............................................. 42
Capital Management........................................... 42
- --------------------------------------------------------------------------------------------
PART II Item 6.
OTHER INFORMATION Exhibits and Reports on Form 8-K................................. 44
Signatures....................................................... 45
============================================================================================
</TABLE>
1
<PAGE>
FINANCIAL STATEMENTS
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
==============================================================================================================================
1995 1994 NINE MONTHS ENDED
--------------------------- ----------------- SEPTEMBER 30
THIRD SECOND FIRST FOURTH THIRD -----------------
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER QUARTER 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $3,244 $3,172 $3,004 $2,796 $2,510 $9,420 $7,010
Interest-bearing deposits in banks 115 120 112 108 87 347 217
Federal funds sold 10 9 8 11 16 27 44
Securities purchased under resale agreements 160 176 135 106 84 471 245
Trading account assets 189 189 163 124 116 541 349
Available-for-sale and held-to-maturity securities 326 323 314 334 340 963 1,040
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 4,044 3,989 3,736 3,479 3,153 11,769 8,905
INTEREST EXPENSE
Deposits 1,262 1,240 1,114 1,019 868 3,616 2,318
Federal funds purchased 27 30 39 15 6 96 12
Securities sold under repurchase agreements 154 150 130 93 82 434 258
Other short-term borrowings 162 168 132 84 71 462 191
Long-term debt 272 266 264 245 211 802 565
Subordinated capital notes 11 12 11 11 11 34 31
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 1,888 1,866 1,690 1,467 1,249 5,444 3,375
- ------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 2,156 2,123 2,046 2,012 1,904 6,325 5,530
PROVISION FOR CREDIT LOSSES 110 100 100 100 110 310 360
- ------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 2,046 2,023 1,946 1,912 1,794 6,015 5,170
NONINTEREST INCOME
Deposit account fees 329 323 317 316 301 969 885
Credit card fees 82 74 75 87 83 231 244
Trust fees 72 78 78 83 69 228 202
Other fees and commissions 323 342 300 304 279 965 807
Trading income 132 151 129 54 120 412 303
Net gain (loss) on available-for-sale securities 17 9 1 (1) (2) 27 25
Net gain on sales of assets 27 14 1 28 33 42 98
Venture capital activities 54 103 87 40 33 244 96
Other income 121 44 105 137 156 270 427
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 1,157 1,138 1,093 1,048 1,072 3,388 3,087
NONINTEREST EXPENSE
Salaries 839 842 809 785 741 2,490 2,151
Employee benefits 195 183 193 179 186 571 524
Occupancy 185 182 173 187 171 540 503
Equipment 170 165 159 160 145 494 429
Amortization of intangibles 110 110 109 107 100 329 304
Communications 89 91 86 86 79 266 237
Professional services 78 76 69 60 54 223 165
Regulatory fees and related expenses 7 74 72 76 72 153 214
Other expense 320 330 319 326 387 969 1,007
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 1,993 2,053 1,989 1,966 1,935 6,035 5,534
- ------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 1,210 1,108 1,050 994 931 3,368 2,723
PROVISION FOR INCOME TAXES 506 463 439 403 384 1,408 1,138
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 704 $ 645 $ 611 $ 591 $ 547 $1,960 $1,585
- ----------------------------------------------------------====================================================================
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ 1.72 $ 1.56 $ 1.46 $ 1.41 $ 1.36 $ 4.75 $ 3.95
EARNINGS PER COMMON SHARE -- ASSUMING FULL DILUTION 1.72 1.55 1.45 1.40 1.35 4.72 3.93
DIVIDENDS DECLARED PER COMMON SHARE 0.46 0.46 0.46 0.40 0.40 1.38 1.20
==============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
======================================================================================================================
1995 1994
------------------------------------ ----------------------
(IN MILLIONS) SEPT. 30 JUNE 30 MARCH 31 DEC. 31 SEPT. 30
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 12,532 $ 12,656 $ 12,404 $ 13,578 $ 12,493
Interest-bearing deposits in banks 5,832 5,620 6,122 6,371 4,884
Federal funds sold 229 467 793 640 570
Securities purchased under resale agreements 6,811 6,131 5,969 5,259 4,474
Trading account assets 9,883 8,133 7,941 6,941 7,103
Available-for-sale securities 9,979 9,868 9,268 9,849 11,166
Held-to-maturity securities 6,927 7,186 7,335 8,167 8,700
Loans 151,212 148,766 144,159 140,912 138,691
Less: Allowance for credit losses 3,655 3,695 3,725 3,690 3,625
- ----------------------------------------------------------------------------------------------------------------------
Net loans 147,557 145,071 140,434 137,222 135,066
Customers' acceptance liability 2,268 2,076 1,977 1,069 833
Accrued interest receivable 1,448 1,335 1,371 1,449 1,221
Goodwill, net 4,263 4,303 4,323 4,296 4,394
Identifiable intangibles, net 2,134 2,172 2,176 2,149 2,213
Unrealized gains on off-balance-sheet instruments 8,843 9,323 11,577 6,267 7,783
Premises and equipment, net 4,011 4,009 3,973 3,955 3,935
Other assets 7,209 8,249 7,525 8,263 9,395
- ----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $229,926 $226,599 $223,188 $215,475 $214,230
- ------------------------------------------------------================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits in domestic offices:
Interest-bearing $ 84,345 $ 85,573 $ 87,140 $ 90,374 $ 91,872
Noninterest-bearing 34,231 34,458 32,712 34,956 33,006
Deposits in foreign offices:
Interest-bearing 35,525 33,985 30,718 27,454 25,981
Noninterest-bearing 1,536 1,764 1,698 1,610 1,807
- ----------------------------------------------------------------------------------------------------------------------
Total deposits 155,637 155,780 152,268 154,394 152,666
Federal funds purchased 3,110 2,274 2,174 3,283 1,690
Securities sold under repurchase agreements 7,187 5,833 6,570 5,505 5,278
Other short-term borrowings 10,289 9,730 8,500 5,053 5,796
Acceptances outstanding 2,268 2,076 1,977 1,069 833
Accrued interest payable 811 706 739 831 719
Unrealized losses on off-balance-sheet instruments 9,547 9,939 11,848 6,571 8,007
Other liabilities 5,334 4,563 4,435 4,450 5,202
Long-term debt 15,277 15,473 14,846 14,823 14,504
Subordinated capital notes 605 605 605 605 605
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 210,065 206,979 203,962 196,584 195,300
STOCKHOLDERS' EQUITY
Preferred stock 2,623 2,723 3,068 3,068 3,368
Common stock 600 598 587 581 580
Additional paid-in capital 8,271 8,213 7,912 7,743 7,732
Retained earnings 9,133 8,663 8,230 7,854 7,480
Net unrealized loss on available-for-sale securities (51) (69) (275) (326) (201)
Common stock in treasury, at cost (715) (508) (296) (29) (29)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 19,861 19,620 19,226 18,891 18,930
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $229,926 $226,599 $223,188 $215,475 $214,230
- ------------------------------------------------------================================================================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
===========================================================================================================================
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
(IN MILLIONS) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,960 $ 1,585
Adjustments to net income to arrive at net cash provided by operating activities:
Provision for credit losses 310 360
Net gain on sales of assets (42) (98)
Net amortization of loan fees and discounts (80) (31)
Depreciation and amortization of premises and equipment 408 361
Amortization of intangibles 329 304
Provision for deferred income taxes 187 405
Change in assets and liabilities net of effects from acquisitions
and pending dispositions:
(Increase) decrease in accrued interest receivable 1 (97)
Increase (decrease) in accrued interest payable (20) 214
Increase in trading account assets (2,934) (197)
Increase in current income taxes payable 287 268
Deferred fees received from lending activities 101 69
Other, net 464 (820)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 971 2,323
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available-for-sale securities:
Sales proceeds 2,094 2,357
Maturities, prepayments, and calls 4,086 4,487
Purchases (5,644) (4,329)
Activity in held-to-maturity securities:
Maturities, prepayments, and calls 2,080 2,122
Purchases (691) (1,234)
Proceeds from sales of loans 1,281 1,122
Purchases of loans (970) (549)
Purchases of premises and equipment (501) (460)
Proceeds from sales of other real estate owned 392 442
Net cash provided (used) by:
Loan originations and principal collections (10,093) (4,805)
Interest-bearing deposits in banks 400 (1,054)
Federal funds sold 411 2,011
Securities purchased under resale agreements (1,552) (323)
Cash used by acquisitions (2) (1,062)
Cash provided by acquisitions 2 1,762
Proceeds from liquidations of assets identified for disposition 30 254
Other, net 49 (186)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities (8,628) 555
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 2,563 2,067
Principal payments and retirements of long-term debt and subordinated capital notes (2,077) (2,312)
Proceeds from issuance of common stock 117 46
Preferred stock repurchased (206) --
Treasury stock purchased (704) (503)
Common stock dividends (515) (422)
Preferred stock dividends (174) (181)
Net cash provided (used) by:
Deposits 1,242 (1,130)
Federal funds purchased (173) 1,084
Securities sold under repurchase agreements 1,682 529
Other short-term borrowings 4,944 106
Other, net (94) (166)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 6,605 (882)
Effect of exchange rate changes on cash and due from banks 6 15
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and due from banks (1,046) 2,011
Cash and due from banks at beginning of period 13,578 10,482
- ---------------------------------------------------------------------------------------------------------------------------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 12,532 $ 12,493
- ---------------------------------------------------------------------------------------------==============================
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
================================================================================================================
1995 1994
------------------------------- -------------------
THIRD SECOND FIRST FOURTH THIRD
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PREFERRED STOCK
Balance, beginning of quarter $ 2,723 $ 3,068 $ 3,068 $ 3,368 $ 2,979
Preferred stock issued - - - - 389
Preferred stock repurchased (100) (97) - (300) -
Convertible preferred stock converted to common stock - (248) - - -
- ----------------------------------------------------------------------------------------------------------------
Balance, end of quarter 2,623 2,723 3,068 3,068 3,368
COMMON STOCK
Balance, beginning of quarter 598 587 581 580 561
Common stock issued 2 11 6 1 19
- ----------------------------------------------------------------------------------------------------------------
Balance, end of quarter 600 598 587 581 580
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of quarter 8,213 7,912 7,743 7,732 7,150
Common stock issued 67 301 169 35 556
Preferred stock issued - - - - 26
Preferred stock repurchased (9) - - (24) -
- ----------------------------------------------------------------------------------------------------------------
Balance, end of quarter 8,271 8,213 7,912 7,743 7,732
RETAINED EARNINGS
Balance, beginning of quarter 8,663 8,230 7,854 7,480 7,131
Net income 704 645 611 591 547
Common stock dividends (171) (172) (172) (149) (140)
Preferred stock dividends (56) (56) (62) (67) (60)
Foreign currency translation adjustments,
net of related income taxes (7) 16 (1) (1) 2
- ----------------------------------------------------------------------------------------------------------------
Balance, end of quarter 9,133 8,663 8,230 7,854 7,480
NET UNREALIZED LOSS ON AVAILABLE-FOR-SALE SECURITIES
Balance, beginning of quarter (69) (275) (326) (201) (210)
Valuation adjustments, net of related income taxes 18 206 51 (125) 9
- ----------------------------------------------------------------------------------------------------------------
Balance, end of quarter (51) (69) (275) (326) (201)
COMMON STOCK IN TREASURY, AT COST
Balance, beginning of quarter (508) (296) (29) (29) (518)
Treasury stock purchased (230) (210) (264) - -
Treasury stock issued 29 - - - 489
Other (6) (2) (3) - -
- ----------------------------------------------------------------------------------------------------------------
Balance, end of quarter (715) (508) (296) (29) (29)
- ----------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $19,861 $19,620 $19,226 $18,891 $18,930
- ---------------------------------------------------------=======================================================
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
NOTE 1. The unaudited consolidated financial statements of
FINANCIAL STATEMENT BankAmerica Corporation and subsidiaries (BAC)
PRESENTATION are prepared in conformity with generally accepted
accounting principles for interim financial information,
the instructions to Form 10-Q, and Rule 10-01 of
Regulation S-X. In the opinion of management, all
adjustments necessary for a fair presentation of the
financial position and results of operations for the
periods presented have been included. All such
adjustments are of a normal recurring nature. These
unaudited consolidated financial statements should be
read in conjunction with the audited consolidated
financial statements included in BankAmerica
Corporation's(the Parent) Annual Report on Form 10-K for
the year ended December 31, 1994.
The unaudited consolidated financial statements of BAC
include the accounts of the Parent and companies in which
more than 50 percent of the voting stock is owned
directly or indirectly by the Parent, including Bank of
America NT&SA (the Bank), Bank of America Illinois,
Seafirst Corporation, and other banking and nonbanking
subsidiaries. The revenues, expenses, assets, and
liabilities of the subsidiaries are included in the
respective line items in the unaudited consolidated
financial statements after elimination of inter-company
accounts and transactions.
Effective January 1, 1995, BAC adopted Statement of
Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan," as amended
(SFAS No. 114). For information on the adoption of this
Statement, refer to Note 4 of the Notes to Consolidated
Financial Statements on pages 7 and 8.
BAC's financial position and results of operations
reflect the effects of the merger with Continental Bank
Corporation subsequent to its consummation on August 31,
1994.
Certain amounts in prior periods have been reclassified
to conform to the current presentation.
- --------------------------------------------------------------------------------
NOTE 2. During the nine-month periods ended September 30, 1995
SUPPLEMENTAL and 1994, BAC made interest payments on deposits and
DISCLOSURE OF CASH other interest-bearing liabilities of $5,464 million and
FLOW INFORMATION $3,162 million, respectively, and made net income tax
payments of $906 million and $474 million, respectively.
During the nine-month periods ended September 30, 1995
and 1994, there were foreclosures of loans with carrying
values of $380 million and $371 million, respectively.
- --------------------------------------------------------------------------------
NOTE 3. During the nine-month period ended September 30, 1995, BAC
AVAILABLE-FOR-SALE sold available-for-sale securities for aggregate
AND HELD-TO-MATURITY proceeds of $2,094 million, resulting in gross realized
SECURITIES gains of $189 million and gross realized losses of $162
million. During the nine-month period ended September 30,
1994, BAC sold available-for-sale securities for aggregate
proceeds of $2,357 million, resulting in gross realized
gains of $91 million and gross realized losses of $66
million.
6
<PAGE>
================================================================================
The fair values and amortized costs of available-for-sale
and held-to-maturity securities were as follows:
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
SECURITIES SECURITIES
---------------------- ---------------------
FAIR AMORTIZED FAIR AMORTIZED
(IN MILLIONS) VALUE COST VALUE COST
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SEPTEMBER 30, 1995 $ 9,979 $10,064 $6,444 $6,927
June 30, 1995 9,868 9,983 6,725 7,186
March 31, 1995 9,268 9,726 6,552 7,335
December 31, 1994 9,849 10,393 7,292 8,167
September 30, 1994 11,166 11,505 8,018 8,700
</TABLE>
During the nine-month period ended September 30, 1995,
trading income included a net unrealized holding gain on
trading securities of $34 million. During the nine-month
period ended September 30, 1994, trading income included a
net unrealized holding loss on trading securities of $47
million. These results exclude the net unrealized trading
results of the Parent's securities broker and dealer
subsidiaries.
In connection with the adoption of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," effective
January 1, 1994, $5.6 billion of held-to-maturity
securities with a fair value of $5.7 billion were
transferred to available-for-sale securities. In addition,
debt-restructuring par bonds and other instruments were
reclassified during the first quarter of 1994 from loans to
available-for-sale and held-to-maturity securities with
carrying values of $1.2 billion and $1.3 billion,
respectively, and fair values of $1.0 billion each
immediately prior to the transfer.
- --------------------------------------------------------------------------------
NOTE 4. Effective January 1, 1995, BAC adopted SFAS No. 114, which
IMPAIRED LOANS requires loans to be measured for impairment using one of
three methods when it is probable that all amounts,
including principal and interest, will not be collected in
accordance with the contractual terms of the loan
agreement. The amount of impairment and any subsequent
changes are recorded through the provision for credit
losses as an adjustment to the allowance for credit losses.
SFAS No. 114 applies to all loans, whether collateralized
or uncollateralized, except for large groups of smaller-
balance, homogeneous loans that are collectively evaluated
for impairment (domestic consumer nonaccrual loans), loans
that are measured at fair value or at the lower of cost or
fair value, leases, and debt securities. In addition, BAC
excludes loans to foreign governments and official
institutions from the scope of SFAS No. 114, as these loans
are collectively evaluated and reserves are established for
each country based upon allocated transfer risk reserve
factors. Finally, loans restructured prior to the effective
date of SFAS No. 114 that are performing in accordance with
their restructured terms are not evaluated for impairment
under SFAS No. 114.
As required by SFAS No. 114, BAC generally measures
impairment based upon the present value of the loan's
expected future cash flows, except where foreclosure or
liquidation is probable or when the primary source of
repayment is provided by real estate collateral. In these
circumstances, impairment is measured based upon the fair
value of the collateral. In addition, in certain
circumstances, impairment may be based on the loan's
observable market value. Generally, BAC evaluates a loan
for impairment in accordance with SFAS No. 114 when it is
placed on nonaccrual status and a portion is internally
risk rated as substandard or doubtful. Substantially all of
BAC's impaired loans are on nonaccrual status.
7
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
================================================================================
The adoption of SFAS No. 114 had no impact on the overall
allowance for credit losses and did not affect BAC's
charge-off or income recognition policies.
The following is a summary of loans considered to be
impaired in accordance with SFAS No. 114 and the related
interest income.
<TABLE>
<CAPTION>
1995
----------------------------------------
(IN MILLIONS) SEPT. 30 JUNE 30 MARCH 31
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Recorded investment in impaired loans not requiring
an allowance for credit losses as determined in
accordance with SFAS No. 114/a/ $ 698 $ 805 $ 840
Recorded investment in impaired loans requiring
an allowance for credit losses as determined in
accordance with SFAS No. 114 635 578 515
----------------------------------------------------------------------------------------------------------
Total recorded investment in impaired loans/b/ $1,333 $1,383 $1,355
--------------------------------------------------------------------======================================
<CAPTION>
1995
-----------------------------------
THIRD SECOND FIRST NINE MONTHS ENDED
(IN MILLIONS) QUARTER QUARTER QUARTER SEPTEMBER 30, 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average recorded investment
in impaired loans $1,364 $1,382 $1,362 $1,370
Interest income recognized/c/ 20 23 21 64
----------------------------------------------------------------------------------------------------------
</TABLE>
/a/ These loans do not require an allowance for credit
losses as measured in accordance with SFAS No. 114
since the values of the impaired loans equal or exceed
the recorded investments in the loans.
/b/ These amounts were evaluated for impairment using the
three measurement methods at September 30, 1995, June
30, 1995, and March 31, 1995, respectively, as
follows: $614 million, $616 million, and $509 million
were evaluated using the present value of the loan's
expected future cash flows method, $712 million, $761
million, and $829 million were evaluated using the
fair value of the collateral, and $7 million, $6
million, and $17 million were evaluated using the
loan's observable market value.
/c/ All interest income recognized was recorded using the
cash method of accounting.
- --------------------------------------------------------------------------------
NOTE 5. The following is a summary of changes in BAC's total
ALLOWANCE FOR allowance for credit losses. This reconciliation reflects
CREDIT LOSSES activity related to all loans.
<TABLE>
<CAPTION>
1995
-------------------------------
THIRD SECOND FIRST NINE MONTHS ENDED
(IN MILLIONS) QUARTER QUARTER QUARTER SEPTEMBER 30, 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, beginning of period $3,695 $3,725 $3,690 $3,690
Credit losses 255 213 212 680
Credit loss recoveries 104 83 135 322
----------------------------------------------------------------------------------------
Net credit losses 151 130 77 358
Provision for credit losses 110 100 100 310
Other net additions 1 -- 12 13
----------------------------------------------------------------------------------------
Balance, End of Period $3,655 $3,695 $3,725 $3,655
-----------------------------------=====================================================
</TABLE>
The following is a summary of the portion of the allowance
for credit losses related to impaired loans, as measured
in accordance with SFAS No. 114.
<TABLE>
<CAPTION>
1995
---------------------------------------------
SEPT. 30 JUNE 30 MARCH 31
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Allowance for credit losses on
impaired loans $270 $237 $212
----------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTE 6. Congress is currently considering several proposals that
SPECIAL DEPOSIT would impose a one-time assessment on deposits insured by
ASSESSMENT the Savings Association Insurance Fund (SAIF). If imposed,
this assessment would recapitalize SAIF to 1.25% of insured
deposits as prescribed by the Federal Deposit Insurance
Corporation Improvement Act. At this time it is not
possible to predict the ultimate provisions of any final
legislation or their effect on BAC.
8
<PAGE>
================================================================================
NOTE 7. During the first quarter of 1995, BAC's Board of Directors
STOCK REPURCHASE authorized a stock repurchase program. This program enables
PROGRAM the Parent to buy back approximately $1.9 billion of its
common stock. Under this program, the Parent may purchase
up to $800 million of its common stock by the end of 1996.
During each quarter of 1995, 1996, and 1997, the Parent may
purchase additional amounts of common stock up to the level
of amortization of goodwill and core deposit intangibles
for that quarter plus any unused amounts from the previous
four quarters. During the nine months ended September 30,
1995, the Parent repurchased 13 million shares of its
common stock in connection with this plan at an average
per-share price of $51.58, which reduced stockholders'
equity by $672 million.
In addition, this program authorized the Parent to buy back
or redeem approximately $500 million of its preferred stock
by the end of 1997. On October 3, 1995, BAC's Board of
Directors modified the stock repurchase program by
authorizing a $250 million increase in the total amount of
BAC's outstanding preferred stock that may be repurchased
or redeemed through the end of 1996.
- --------------------------------------------------------------------------------
NOTE 8. On September 30, 1995, the Parent redeemed all 200,000
PREFERRED STOCK outstanding shares of its 11% Cumulative Fixed Preferred
Stock, Series I (Preferred Stock Series I). The shares were
represented by 4 million depositary shares, each
corresponding to a one-twentieth interest in a share of
Preferred Stock, Series I. The redemption price was $26.375
per depositary share. The quarterly dividend of $0.6875 per
depositary share was paid on September 30, 1995 to holders
of record on September 15, 1995.
On May 31, 1995, the Parent redeemed all 1,788,000 shares
of its Adjustable Rate Preferred Stock, Series 1. The
redemption price was equal to the stated value of $50.00
per share, plus accrued and unpaid dividends.
In addition, on April 28, 1995, the Parent announced its
intention to redeem on May 31, 1995 all of the then-
unconverted outstanding shares of its 6 1/2% Cumulative
Convertible Preferred Stock, Series G. On or prior to that
date, 4,966,246 shares of the 4,998,357 shares that were
outstanding on the announcement date were converted to
5,445,439 shares of common stock at no additional cost to
the holders or to the Parent. The remaining 32,111 shares
were redeemed by the Parent on May 31, 1995 at the
redemption price of $51.95 per share, plus accrued and
unpaid dividends.
- --------------------------------------------------------------------------------
NOTE 9. The following is a summary of the components of income
INCOME TAXES tax expense:
<TABLE>
<CAPTION>
1995 1994 NINE MONTHS ENDED
--------------------------------- --------------------- SEPTEMBER 30
THIRD SECOND FIRST FOURTH THIRD -----------------
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER 1995 1994
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PROVISION FOR INCOME TAXES
Federal $354 $331 $319 $310 $269 $1,004 $ 816
State and local 91 86 83 66 72 260 211
Foreign 61 46 37 27 43 144 111
--------------------------------------------------------------------------------------------------------------
$506 $463 $439 $403 $384 $1,408 $1,138
----------------------------------============================================================================
</TABLE>
The income tax provision for the third quarter of 1995
reflected BAC's estimated annual effective income tax rate
of 41.8 percent, which is unchanged from the annual
effective income tax rate for the third quarter of 1994.
The annual effective income tax rate is higher than the
federal statutory tax rate of 35.0 percent due principally
to state income taxes and the amortization of nondeductible
goodwill.
9
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
================================================================================
NOTE 10. Earnings per common share have been computed based on the
EARNINGS PER following:
COMMON SHARE
<TABLE>
<CAPTION>
1995 1994 NINE MONTHS ENDED
------------------------------ ------------------ SEPTEMBER 30
(DOLLAR AMOUNTS IN MILLIONS, THIRD SECOND FIRST FOURTH THIRD -----------------
SHARE AMOUNTS IN THOUSANDS) QUARTER QUARTER QUARTER QUARTER QUARTER 1995 1994
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income applicable to
common stock $648 $589 $549 $524 $487 $1,786 $1,404
Average number of common
shares outstanding 371,871 371,992 371,764 370,698 355,012 371,876 352,851
Average number of common
and common equivalent
shares outstanding 376,643 376,213 375,084 373,922 357,962 375,980 355,084
Average number of common
shares outstanding --
assuming full dilution 377,421 379,182 381,141 379,402 363,442 379,248 360,564
</TABLE>
-----------------------------------------------------------
NOTE 11. In the ordinary course of business, BAC enters into various
OFF-BALANCE-SHEET types of transactions involving credit-related financial
TRANSACTIONS instruments and foreign exchange and derivatives contracts
that contain off-balance-sheet risk. Credit-related
financial instruments are typically customer-driven while
foreign exchange and derivatives contracts are entered into
both on behalf of customers and for BAC's own account for
trading purposes and in managing interest rate, foreign
exchange, and commodity risks.
CREDIT-RELATED FINANCIAL INSTRUMENTS
The following table is a summary of the contractual amounts
of each significant class of credit-related financial
instruments outstanding. These amounts represent the
amounts at risk should the contract be fully drawn upon,
the client default, and the value of any existing
collateral become worthless.
<TABLE>
<CAPTION>
1995 1994
----------------------- ---------------------------------
(IN MILLIONS) SEPT. 30 JUNE 30 MARCH 31 DEC. 31 SEPT. 30
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commitments to extend credit:
Unutilized credit card lines $34,445 $32,176 $30,026 $28,058 $26,141
Other commitments to extend credit/a/ 95,517 92,896 85,112 82,929 85,688
Standby letters of credit and financial
guarantees/b/ 15,675 15,598 15,202 15,870 15,669
Commercial letters of credit 4,342 4,650 3,977 4,213 4,228
--------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Represents agreements to extend credit to customers for
which BAC may have received fees. These commitments
have specified interest rates and generally have fixed
expiration dates and may be terminated by BAC if
certain conditions of the contract are violated.
/b/ Net of participations sold of $2,607 million at
September 30, 1995, $2,238 million at June 30, 1995,
$2,301 million at March 31, 1995, $2,402 million at
December 31, 1994, and $2,483 million at September 30,
1994.
FOREIGN EXCHANGE AND DERIVATIVES CONTRACTS
The tables on page 11 summarize the notional, credit risk,
and credit exposure amounts for each significant class of
foreign exchange and derivative contract outstanding in
BAC's trading portfolio and the notional and credit risk
amounts for each significant class of foreign exchange and
derivative contract outstanding in BAC's asset and
liability management portfolio. These tables should be read
in conjunction with the descriptions of such products and
their risks included on pages 28, 30, 39-43, and 71-80 of
BAC's 1994 Annual Report to Shareholders.
10
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 1995 DECEMBER 31, 1994
---------------------------------- ----------------------------------
NOTIONAL CREDIT CREDIT NOTIONAL CREDIT CREDIT
(IN MILLIONS) AMOUNT RISK/a/ EXPOSURE/b/ AMOUNT RISK/a/ EXPOSURE/b/
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $ 417,342 $ 7,247 $ 2,640/c/ $ 348,515 $ 4,971 $1,960/c/
Futures and forward rate contracts:
Commitments to purchase 161,459 38 38 95,010 192 192
Commitments to sell 199,284 282 282 116,408 35 35
Written options 40,857 --/d/ --/d/ 35,909 --/d/ --/d/
Purchased options 50,152 380 301 44,779 441 279
------------------------------------------------------------------------------------------------------------
869,094 7,947 3,261 640,621 5,639 2,466
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts 697,557 11,556 3,575 630,867 6,623 2,234
Written options 26,097 --/d/ --/d/ 19,617 --/d/ --/d/
Purchased options 25,741 565 395 18,861 267 208
Currency swaps 23,644 1,779 1,598 21,943 1,595 1,353
------------------------------------------------------------------------------------------------------------
773,039 13,900 5,568 691,288 8,485 3,795
Stock index options and
commodity contracts 339 15 14 825 9 6
------------------------------------------------------------------------------------------------------------
$1,642,472/e/ $21,862 $ 8,843 $1,332,734/f/ $14,133 $6,267
------------------------------------========================================================================
<CAPTION>
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR ASSET AND LIABILITY MANAGEMENT PURPOSES
------------------------------------------------------------------------------------------------------------
SEPTEMBER 30,1995 DECEMBER 31, 1994
----------------------- -------------------------
NOTIONAL CREDIT NOTIONAL CREDIT
(IN MILLIONS) AMOUNT RISK/a/ AMOUNT RISK/a/
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $32,837 $ 13 $32,864 $120
Futures and forward rate contracts 34,596 -- 28,773 --
Purchased options 9,200 64 4,510 43
------------------------------------------------------------------------------------------------------------
76,633 77 66,147 163
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts 1,615 -- 1,383 --
Currency swaps 506 153 443 129
------------------------------------------------------------------------------------------------------------
2,121 153 1,826 129
------------------------------------------------------------------------------------------------------------
$78,754/e/ $230 $67,973/f/ $292
-------------------------------------------=================================================================
</TABLE>
/a/ Excluding the effects of legally enforceable master
netting agreements.
/b/ Including the effects of legally enforceable master
netting agreements.
/c/ Including the results of cross product netting of
certain interest rate derivatives and currency swaps.
/d/ Interest rate and foreign exchange options written
have no credit risk or credit exposure.
/e/ Interest rate swaps, interest rate futures and forward
contracts, and interest rate options in both the
trading and asset and liability management portfolios
include $13.6 billion, $2.8 billion, and $0.6 billion,
respectively, of intercompany hedging-related
contracts. Foreign exchange contracts in both the
trading and asset and liability management portfolios
include $1.8 billion of intercompany hedging-related
contracts.
/f/ Interest rate swaps and interest rate options in both
the trading and asset and liability management
portfolios include $9.8 billion and $0.1 billion,
respectively, of intercompany hedging-related
contracts. Foreign exchange contracts in both the
trading and asset and liability management portfolios
include $1.5 billion of intercompany hedging-related
contracts.
Notional amounts represent the principal value on which
calculations of amounts to be exchanged are based, and do
not represent the potential for gain or loss associated
with such transactions. Credit risk amounts represent BAC's
gross replacement value on contracts in a gain position if
all counterparties failed to perform according to the terms
of the contract and the value of any existing collateral
became worthless, based on then-current currency exchange
and interest rates at each respective date. Credit exposure
amounts represent BAC's net replacement values after taking
into consideration legally enforceable master netting
agreements.
11
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
================================================================================
The following tables summarize the period-end and average
fair values of each significant class of foreign exchange
and derivative contract outstanding in BAC's trading
portfolio and the period-end fair values for each
significant class of foreign exchange and derivative
contract in BAC's asset and liability management portfolio.
Fair value amounts were generally calculated using
discounted cash flow models based on current market yields
for similar instruments and the maturity of each
instrument. These amounts include the effects of master
netting agreements.
<TABLE>
<CAPTION>
FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
-------------------------------------------------------------------------------------------------
SEPTEMBER 30, 1995 DECEMBER 31, 1994
---------------------------- -----------------------------
AVERAGE AVERAGE
FAIR VALUE FAIR VALUE
PERIOD END FOR THE PERIOD END FOR THE
(IN MILLIONS) FAIR VALUE QUARTER ENDED/a/ FAIR VALUE YEAR ENDED/a/
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps:
Assets $ 2,640 $ 2,637 $ 1,960 $ 2,230
Liabilities (2,421) (2,345) (1,588) (1,659)
Futures and forward rate
contracts:
Assets 320 338 227 149
Liabilities (302) (314) (189) (133)
Written options (219) (213) (299) (292)
Purchased options 301 266 279 283
-------------------------------------------------------------------------------------------------
319 369 390 578
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures
contracts:
Assets 3,575 3,972 2,234 3,393
Liabilities (4,251) (4,939) (2,766) (3,744)
Written options (445) (462) (228) (238)
Purchased options 395 401 208 221
Currency swaps:
Assets 1,598 1,717 1,353 1,538
Liabilities (1,898) (2,029) (1,494) (1,729)
-------------------------------------------------------------------------------------------------
(1,026) (1,340) (693) (559)
Stock index options and
commodity contracts:
Assets 14 14 6 9
Liabilities (11) (9) (7) (9)
-------------------------------------------------------------------------------------------------
3 5 (1) --
-------------------------------------------------------------------------------------------------
$ (704) $ (966) $ (304) $ 19
--------------------------------=================================================================
<CAPTION>
FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR ASSET AND LIABILITY
MANAGEMENT PURPOSES
------------------------------------------------------------------------------------------------
(IN MILLIONS) SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST RATE CONTRACTS
Interest rate swaps $(198) $(693)
Futures and forward rate contracts 4 (42)
Purchased options 47 39
------------------------------------------------------------------------------------------------
(147) (696)
FOREIGN EXCHANGE CONTRACTS
Spot, forward, and futures contracts -- --
Currency swaps 6 129
------------------------------------------------------------------------------------------------
6 129
-------------------------------------------------------------------------------------------------
$(141) $(567)
------------------------------------------------------------------===============================
</TABLE>
/a/ Average fair value amounts are calculated based on
monthly balances.
12
<PAGE>
================================================================================
TRADING ACTIVITIES
Trading income represents the net amount earned from BAC's
trading activities, which include entering into
transactions to meet customer demand and taking positions
for BAC's own account in a diverse range of financial
instruments and markets. The profitability of these trading
activities depends largely on the volume and diversity of
the transactions BAC executes, the level of risk it is
willing to assume, and the volatility of price and rate
movements. Trading income, as disclosed in BAC's
consolidated statement of operations, does not include the
net interest income derived from foreign exchange contracts
and derivatives associated with trading activities.
However, the trading-related net interest income amounts
are presented in the table below as they are considered in
evaluating the overall profitability of those activities.
<TABLE>
<CAPTION>
TRADING INCOME AND NET INTEREST INCOME BY FUNCTION
----------------------------------------------------------------------------------------------
1995 1994 NINE MONTHS ENDED
--------------------------- -------------------- SEPTEMBER 30
THIRD SECOND FIRST FOURTH THIRD ----------------
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER 1995 1994
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TRADING INCOME
Interest rate $ 13 $ 9 $ 25 $ 14 $ 20 $ 47 $ 49
Foreign exchange 74 80 83 43 63 237 194
Debt instruments 45 62 21 (3) 37 128 60
----------------------------------------------------------------------------------------------
$132 $151 $129 $ 54 $120 $412 $303
---------------------------===================================================================
NET INTEREST INCOME
Interest rate $ 7 $ 2 $ 3 $ (2) $ 2 $ 12 $ (1)
Foreign exchange 10 7 2 1 3 19 6
Debt instruments 37 49 28 21 25 114 64
----------------------------------------------------------------------------------------------
$ 54 $ 58 $ 33 $ 20 $ 30 $145 $ 69
---------------------------===================================================================
</TABLE>
To reflect the business purpose and use of the financial
contracts into which BAC enters, trading income and the
related net interest revenue associated with such contracts
have been allocated into three broad functional categories:
interest rate trading, foreign exchange trading, and debt
instruments trading. Trading income from interest rate
instruments primarily includes income from interest rate
and currency swaps and from interest rate futures, option
contracts, and forward rate agreements, as well as debt
instruments used in the management of this function.
Foreign exchange trading-related income primarily includes
amounts generated from foreign exchange spot, forward,
futures, and option contracts. Trading income from debt
instruments primarily includes amounts from debt
securities.
13
<PAGE>
BANKAMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
================================================================================
Asset and Liability Management Activities
BAC uses foreign exchange contracts and derivative
instruments, primarily interest rate contracts, to manage
interest rate risk related to specific assets and
liabilities, including fixed rate and adjustable rate
residential mortgages, long-term debt, and deposits.
Foreign exchange contracts are used to hedge net capital
exposure and foreign currency exposures. For a detailed
description of BAC's asset and liability management
objectives and strategies used to achieve those objectives,
refer to page 76 of BAC's 1994 Annual Report to
Shareholders.
The expected maturities and weighted average interest rates
associated with BAC's asset and liability management
interest rate swap portfolio at September 30, 1995 were not
significantly different from those at year-end 1994.
Securities Lending
BAC conducts securities lending transactions primarily for
institutional trust customers and, at times, indemnifies
these customers against various losses. All securities
lending transactions are collateralized by U.S. government
or federal agency securities, cash, or letters of credit
with total market value equal to or in excess of the market
value of the securities lent. In the event of default by a
customer combined with a decline in the value of the
associated collateral, BAC may be exposed to risk of loss.
During the first half of 1995, BAC made a decision to exit
its institutional trust and securities services business.
The following summarizes indemnified securities lending
transactions and the associated collateral:
<TABLE>
<CAPTION>
1995 1994
------------------------------- ---------------------
(IN MILLIONS) SEPT. 30 JUNE 30 MARCH 31 DEC. 31 SEPT. 30
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Indemnified securities lent $894 $4,220 $6,350 $5,910 $6,241
Associated collateral 909 4,321 6,501 6,039 6,613
----------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
================================================================================
[THIS PAGE INTENTIONALLY LEFT BLANK]
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
HIGHLIGHTS
================================================================================
The following is a summary of third-quarter 1995 financial
information for BankAmerica Corporation and subsidiaries
(BAC).
. BAC reported third-quarter 1995 earnings per share of
$1.72, an increase of 26 percent from $1.36 for the same
period a year ago. Net income for the third quarter of
1995 was $704 million, up 29 percent from $547 million
for the third quarter of 1994.
. The return on average common equity was 15.09 percent for
the third quarter of 1995, an increase of 197 basis
points from the same period in 1994. In addition, the
return on average total assets increased 14 basis points
from a year ago to 1.21 percent for the third quarter of
1995.
. BAC's net interest margin for the third quarter of 1995
was 4.52 percent, essentially unchanged from the same
period a year ago.
. Noninterest income for the third quarter of 1995
increased $85 million from the amount reported in the
same period last year primarily as a result of higher fee
and commission income.
. Noninterest expense for the third quarter of 1995
decreased $60 million from the previous quarter primarily
due to a $65 million refund received from the Federal
Deposit Insurance Corporation (FDIC). Noninterest expense
for the third quarter of 1995 increased $58 million from
the same period a year ago.
. BAC's expense to revenue ratio decreased to 56.4 percent
in the third quarter of 1995 from 61.1 percent in the
third quarter of 1994.
. Average loan outstandings increased $3.0 billion, or 2.0
percent, from the previous quarter, largely reflecting
continued growth in several consumer loan categories.
. In connection with its previously announced stock
repurchase program, BAC repurchased 3.5 million shares of
its common stock during the third quarter of 1995 at an
average per-share price of $57.48, bringing year-to-date
repurchases to 13.0 million shares at an average per-
share price of $51.58.
. Total nonaccrual assets declined $107 million, or 5
percent, from their June 30, 1995 level, resulting in a
nonperforming assets ratio (computed as total nonaccrual
assets and other real estate owned to total assets) of
1.03 percent at September 30, 1995. In addition, BAC's
nonaccrual coverage ratio (computed as allowance for
credit losses to total nonaccrual assets) was 197 percent
at September 30, 1995, up from 188 percent at June 30,
1995.
Note: The information contained in the Management's Discussion and Analysis
section reflects the effects of the merger with Continental Bank
Corporation (Continental) subsequent to its consummation on August 31,
1994.
16
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------------------
1995 1994 NINE MONTHS ENDED
----------------------------------- -------------------- SEPTEMBER 30
(DOLLAR AMOUNTS IN MILLIONS, THIRD SECOND FIRST FOURTH THIRD -----------------
EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER QUARTER 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Interest income $ 4,044 $ 3,989 $ 3,736 $ 3,479 $ 3,153 $ 11,769 $ 8,905
Interest expense 1,888 1,866 1,690 1,467 1,249 5,444 3,375
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income 2,156 2,123 2,046 2,012 1,904 6,325 5,530
Provision for credit losses 110 100 100 100 110 310 360
Noninterest income 1,157 1,138 1,093 1,048 1,072 3,388 3,087
Noninterest expense 1,993 2,053 1,989 1,966 1,935 6,035 5,534
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 1,210 1,108 1,050 994 931 3,368 2,723
Provision for income taxes 506 463 439 403 384 1,408 1,138
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 704 $ 645 $ 611 $ 591 $ 547 $ 1,960 $ 1,585
- ---------------------------------------========================================================================================
PER SHARE DATA
Earnings per common and common
equivalent share $ 1.72 $ 1.56 $ 1.46 $ 1.41 $ 1.36 $ 4.75 $ 3.95
Earnings per common share -- assuming
full dilution 1.72 1.55 1.45 1.40 1.35 4.72 3.93
Dividends declared per common share 0.46 0.46 0.46 0.40 0.40 1.38 1.20
- -------------------------------------------------------------------------------------------------------------------------------
STOCK DATA
Book value per common share at
period end $ 46.59 $ 45.38 $ 43.72 $ 42.63 $ 42.02 $ 46.59 $ 42.02
Common stock price range:
High 61 1/8 55 1/4 49 5/8 46 1/4 49 5/8 61 1/8 50 1/4
Low 52 1/2 48 3/8 39 1/2 38 5/8 44 39 1/2 38 3/8
Closing common stock price 59 7/8 52 5/8 48 1/4 39 1/2 44 1/8 59 7/8 44 1/8
Average number of common
and common equivalent shares
outstanding (in thousands) 376,643 376,213 375,084 373,922 357,962 375,980 355,084
Average number of common
shares outstanding -- assuming
full dilution (in thousands) 377,421 379,182 381,141 379,402 363,442 379,248 360,564
Number of common shares outstanding
at period end (in thousands) 369,998 372,336 369,543 371,182 370,206 369,998 370,206
- -------------------------------------------------------------------------------------------------------------------------------
FINANCIAL CONDITION AND CAPITAL
AT PERIOD END
Loans $151,212 $148,766 $144,159 $140,912 $138,691 $151,212 $138,691
Total assets 229,926 226,599 223,188 215,475 214,230 229,926 214,230
Deposits 155,637 155,780 152,268 154,394 152,666 155,637 152,666
Long-term debt and
subordinated capital notes 15,882 16,078 15,451 15,428 15,109 15,882 15,109
Common equity 17,238 16,897 16,158 15,823 15,562 17,238 15,562
Total equity 19,861 19,620 19,226 18,891 18,930 19,861 18,930
- -------------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL RATIOS
Rate of return (based on net
income) on:
Average common equity 15.09% 14.30% 13.86% 13.24% 13.12% 14.44% 13.18%
Average total equity 14.14 13.29 12.95 12.35 12.17 13.47 12.28
Average total assets 1.21 1.13 1.14 1.09 1.07 1.16 1.07
Ratio of common equity to
total assets 7.50 7.46 7.24 7.34 7.26 7.50 7.26
Ratio of total equity to
total assets 8.64 8.66 8.61 8.77 8.83 8.64 8.33
Ratio of average total
equity to average total assets 8.59 8.51 8.79 8.84 8.77 8.63 8.72
===============================================================================================================================
</TABLE>
17
<PAGE>
BUSINESS SECTORS
================================================================================
<TABLE>
<CAPTION>
SELECTED BUSINESS SECTOR DATA
- -----------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30/a/
----------------------------------------------------------------------------------------
U.S. CORPORATE AND
TOTAL CONSUMER BANKING INTERNATIONAL BANKING COMMERCIAL REAL ESTATE
------------------ ------------------ --------------------- ----------------------
(DOLLAR AMOUNTS IN MILLIONS) 1995 1994 1995 1994 1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net interest income $ 6,325 $ 5,530 $ 3,416 $ 3,141 $ 1,036 $ 714 $ 346 $ 318
Provision for credit losses 310 360 462 566 17 (19) (184) (176)
Noninterest income 3,388 3,087 1,267 1,233 1,419 1,166 25 55
Noninterest expense 6,035 5,534 2,794 2,735 1,378 1,063 88 83
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 3,368 2,723 1,427 1,073 1,060 836 467 466
Provision for (benefit from) income taxes 1,408 1,138 614 468 428 331 194 193
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) 1,960 1,585 813 605 632 505 273 273
Preferred stock dividends 174 181 53 58 63 57 13 15
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Attributable to
Common Equity $ 1,786 $ 1,404 $ 760 $ 547 $ 569 $ 448 $ 260 $ 258
- -------------------------------------------========================================================================================
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $145,254 $125,036 $63,790 $57,580 $39,045 $30,483 $9,524 $9,564
Earning assets 186,743 165,024 64,435 58,258 65,145 49,978 9,524 9,564
Total assets 225,475 197,874 70,639 64,588 85,281 65,410 9,375 9,390
Deposits 152,882 142,686 74,089 76,838 35,876 24,657 1,431 1,827
Common equity 16,542 14,239 5,044 4,585 5,979 4,451 1,193 1,148
SELECTED FINANCIAL RATIOS
Return on average common equity 14.44% 13.18% 20.15% 15.93% 12.72% 13.46% 29.20% 30.09%
Expense to revenue/c/ 58.59 60.43 55.84 58.45 54.71 55.53 23.13 22.44
===================================================================================================================================
</TABLE>
BAC internally segregates its operations into business
sectors. However, since BAC's operations are highly
integrated, certain non-sector-specific income, expenses,
assets, and liabilities must be allocated to the appropriate
customer and market sectors. Domestic sources of funds,
overhead, and federal and state taxes are allocated in this
process. Furthermore, for internal business sector
monitoring, the unallocated allowance for credit losses and
related provision for credit losses are allocated to the
business sectors. Equity is assigned on a risk-adjusted
basis. The information set forth in the table on pages 18 and
19 reflects the condensed income statements and selected
average balance sheet components and financial ratios by
business sectors. The information presented does not
represent the business sectors' financial condition and
results of operations as if they were managed as independent
entities.
Consumer Banking -- Consumer Banking's net income for the
first nine months of 1995 was up $208 million, or 34 percent,
from the amount reported for the same period last year. This
increase largely reflected improved results in BAC's
California retail deposit business and Seafirst's consumer
operations, partially offset by a decline in credit card net
income. Net interest income was up from the first nine months
of 1994 due to increased loan volumes and the widening of
deposit spreads. Partially offsetting this increase were
compressed spreads on residential and credit card loans that
resulted from repricing lags on residential first mortgages
and from the conversion of certain customers to a new
variable-rate credit card product. Noninterest income
increased due to higher revenues from service charges on
deposit accounts and growth in loan servicing fees.
Noninterest expense increased primarily due to higher credit
card direct mail and branch advertising expenses incurred to
promote new co-branding and photocard products. In addition,
noninterest expense levels grew in the residential lending
business in connection with BAC's expanded
18
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30/a/
---------------------------------------------------------------------------------------------
PRIVATE BANKING AND
MIDDLE MARKET BANKING INVESTMENT SERVICES NON-CALIFORNIA BANKS/b/ OTHER
--------------------- ------------------- -------------------- --------------------
(DOLLAR AMOUNTS IN MILLIONS) 1995 1994 1995 1994 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net interest income $559 $417 $120 $ 91 $693 $646 $ 155 $203
Provision for credit losses (4) (46) (1) (2) (12) (2) 32 39
Noninterest income 136 110 233 206 248 218 60 99
Noninterest expense 324 277 299 318 819 811 333 247
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 375 296 55 (19) 134 55 (150) 16
Provision for (benefit from) income taxes 156 125 21 (9) 53 23 (58) 7
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) 219 171 34 (10) 81 32 (92) 9
Preferred stock dividends 12 12 3 4 15 19 15 16
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Attributable to
Common Equity $207 $159 $ 31 $(14) $ 66 $ 13 $(107) $ (7)
- --------------------------------------------======================================================================================
SELECTED AVERAGE
BALANCE SHEET COMPONENTS
Loans $14,784 $11,796 $3,512 $ 2,651 $14,203 $12,320 $ 396 $ 642
Earning assets 14,801 11,815 3,554 2,708 20,583 20,780 8,701 11,921
Total assets 16,867 13,398 4,071 3,141 23,652 23,885 15,590 18,062
Deposits 6,749 6,637 5,729 4,792 22,665 23,618 6,343 4,317
Common equity 1,145 914 318 295 1,435 1,487 1,428 1,359
SELECTED FINANCIAL RATIOS
Return on average common equity 24.16% 23.34% 12.89% (6.40)% 6.15% 1.17% (10.03)% (0.75)%
Expense to revenue/c/ 45.04 50.66 81.54 104.11 79.34 84.41 139.68 71.89
==================================================================================================================================
</TABLE>
/a/ For comparability purposes, both 1995 and 1994 amounts reflect BAC's
business-sector allocation methodologies at September 30, 1995.
/b/ Excludes Seafirst and Bank of America Illinois, which are reflected
within the applicable business sectors.
/c/ Excludes net other real estate owned expense and amortization of
intangibles.
mortgage banking operations. These increases in noninterest
expense were partially offset by a decrease in regulatory
fees and related expenses, as discussed on page 26. The
provision for credit losses declined $104 million, which was
primarily reflected in the consumer and residential lending
businesses. Average loan outstandings grew $6.2 billion, or
11 percent, from the first nine months of 1994, reflecting
increases in residential first mortgages, other consumer, and
credit card loans. Average deposits declined $2.7 billion,
reflecting decreases in most deposit categories. The decrease
in deposits was largely due to competitive pricing in the
marketplace.
U.S. Corporate and International Banking -- U.S. Corporate
and International Banking's net income for the first nine
months of 1995 increased $127 million, or 25 percent, from
that of the same period a year ago. The increase in this
sector's noninterest income and expense levels and average
loans and deposits was largely a result of BAC's acquisition
of Continental Bank Corporation (Continental).
Notwithstanding BAC's expanded midwestern banking operations,
fluctuations in key categories can be attributed to the
following factors. Net interest income grew due to loan
growth in the commercial and industrial and foreign sectors.
Noninterest income rose in connection with improved results
from BAC's venture capital, trading, and loan syndication
activities, while noninterest expense grew due to continued
expansion of BAC's global capital market operations. Average
deposits increased, reflecting higher foreign deposits that
were primarily utilized to fund loan growth.
19
<PAGE>
================================================================================
Commercial Real Estate -- Net income for Commercial Real
Estate was $273 million for the first nine months of both
1995 and 1994. Net interest income increased $28 million, or
9 percent, from the first nine months of 1994 primarily due
to the acquisition of Continental. Noninterest income
declined $30 million primarily due to fewer asset sales as a
majority of the sector's bulk sales of problem assets
occurred prior to 1995.
Middle Market Banking -- Middle Market Banking's net income
for the first nine months of 1995 grew $48 million, or 28
percent, from the same period of 1994. This growth reflected
improved results in BAC's California commercial businesses as
deposit spreads widened and loan volumes increased. In
addition, the improved results included the effects of the
addition of Continental. Increases in noninterest income,
noninterest expense, and average loan outstandings were
largely due to BAC's expanded midwestern banking business.
Private Banking and Investment Services -- Net income for
Private Banking and Investment Services was $34 million in
the first nine months of 1995, compared with a net loss of
$10 million in the comparable period of 1994. Year-to-date
September 1994 results included $83 million of capital
additions to the Pacific Horizon money market mutual funds,
as discussed on page 25. Net interest income increased
primarily due to Continental's contribution.
Non-California Banks -- Non-California Banks, which excludes
Seafirst Corporation and Bank of America Illinois, produced
year-to-date 1995 earnings of $81 million, an increase of $49
million from the same period a year ago. Substantially all of
the non-California banks experienced improved financial
results, particularly Nevada, Texas, Oregon, and Arizona. Net
interest income increased due to higher loan volumes and the
widening of deposit spreads. Average loan outstandings
increased $1.9 billion, or 15 percent, from the first nine
months of 1994, reflecting growth in most loan categories.
This loan growth primarily occurred in Arizona, Nevada, and
Oregon. Average deposits declined $1.0 billion, or 4 percent.
The expense-to-revenue ratio for this sector declined from
84.41 percent in the first nine months of 1994 to 79.34
percent in the first nine months of 1995, as this sector's
revenue base experienced solid growth, while expenses were
maintained at an appropriate level.
Other -- Other amounts are primarily associated with BAC's
institutional trust and securities services, asset and
liability management activities, and various other services.
This sector had a net loss of $92 million in the first nine
months of 1995, compared with net income of $9 million in the
first nine months of 1994. This decrease was primarily
attributable to an increase in unallocated corporate expenses
and a higher net loss in the institutional trust and
securities services business.
20
<PAGE>
RESULTS OF OPERATIONS
================================================================================
NET INTEREST Taxable-equivalent net interest income was $2,163 million for
INCOME the third quarter of 1995, up $253 million from the amount
reported for the third quarter of 1994. Taxable-equivalent
net interest income totaled $6,345 million and $5,547
million, respectively, for the first nine months of 1995 and
1994. These increases resulted from growth in average loans,
which included the effects of mergers and acquisitions. BAC's
net interest margin was 4.52 percent for the quarter ended
September 30, 1995, essentially unchanged from the comparable
period in 1994. The net interest margin for the first nine
months of 1995 was 4.53 percent, up from 4.49 percent for the
same period in 1994.
BAC's net interest margin includes the results of hedging
with certain on- and off-balance-sheet financial instruments.
In the third quarter and first nine months of 1995, BAC's net
interest income included approximately $10 million and $50
million, respectively, attributable to hedging with
derivative instruments, compared with approximately $75
million and $330 million, respectively, in the comparable
periods of 1994. The hedging amounts for both the third
quarter and first nine months of 1995 accounted for
approximately 5 basis points of the net interest margin for
those periods, while the hedging amounts for the comparable
periods of 1994 accounted for 20 basis points and 25 basis
points, respectively.
21
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
- ------------------------------------------------------------------------------------------------------------------------------------
THIRD QUARTER 1995 THIRD QUARTER 1994
------------------------------------ ------------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits in banks $ 5,887 $ 115 7.73% $ 5,285 $ 87 6.56%
Federal funds sold 663 10 5.87 1,380 16 4.58
Securities purchased under resale agreements 9,232 160 6.89 5,759 84 5.80
Trading account assets 9,252 191 8.19 6,412 118 7.29
Available-for sale securities/cd/ 9,957 200 8.02 9,171 134 5.81
Held-to-maturity securities/c/ 7,055 129 7.30 11,253 208 7.41
Domestic loans:
Counsumer-residential first mortgages 35,972 651 7.24 32,417 484 5.97
Consumer-residential junior mortgages 14,099 319 8.98 13,404 258 7.63
Consumer-credit card 8,399 312 14.86 7,221 283 15.67
Other consumer 14,395 368 10.14 11,724 306 10.36
Commercial and industrial 31,392 660 8.34 24,385 436 7.09
Commercial loans secured by real estate 10,642 245 9.21 9,435 196 8.32
Construction and development loans
secured by real estate 3,285 89 10.80 3,811 82 8.51
Financial institutions 2,531 37 5.76 2,184 29 5.27
Agricultural 1,607 40 9.84 1,687 34 8.08
Lease financing 1,858 29 6.18 1,662 28 6.73
Loans for purchasing or carrying securities 1,184 22 7.24 1,478 21 5.53
Other 1,351 22 6.48 1,231 19 5.96
-------- ------ -------- --------
Total domestic loans 126,715 2,794 8.78 110,639 2,176 7.83
Foreign loans 22,127 452 8.10 18,860 336 7.07
-------- ------ -------- --------
Total loans/d/ 148,842 3,246 8.68 129,499 2,512 7.72
-------- ------ -------- --------
Total earning assets 190,888 $4,051 8.44 168,759 $ 3,159 7.45
====== ========
Nonearning assets 42,689 37,980
Less: Allowance for credit losses 3,668 3,507
-------- --------
TOTAL ASSETS $229,909 $203,232
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic interest-bearing deposits:
Transaction $ 13,063 $ 39 1.19% $ 13,773 $ 40 1.16%
Savings 13,557 71 2.08 14,682 76 2.05
Money market 28,576 219 3.03 32,155 207 2.55
Time 29,630 382 5.12 28,179 225 3.17
-------- ------ -------- --------
Total domestic interest-bearing deposits 84,826 711 3.33 88,789 548 2.45
Foreign interest-bearing deposits:
Banks located in foreign countries 10,520 162 6.10 6,940 113 6.43
Governments and official institutions 7,417 107 5.74 5,207 63 4.77
Time, savings, and other 17,081 282 6.54 11,730 144 4.89
-------- ------ -------- --------
Total foreign interest-bearing deposits 35,018 551 6.24 23,877 320 5.31
-------- ------ -------- --------
Total interest-bearing deposits 119,844 1,262 4.18 112,666 868 3.06
Federal funds purchased 1,800 27 6.02 580 6 4.26
Securities sold under repurchase agreements 9,670 154 6.31 6,066 82 5.40
Other short-term borrowings 9,966 162 6.48 4,341 71 6.49
Long-term debt 15,463 272 6.98 13,990 211 5.99
Subordinated capital notes 605 11 7.52 606 11 6.81
-------- ------ -------- --------
Total interest-bearing liabilities 157,348 $1,888 4.76 138,249 $ 1,249 3.58
====== ========
Domestic noninterest-bearing deposits 33,515 31,825
Foreign noninterest-bearing deposits 1,623 1,451
Other noninterest-bearing liabilities 17,670 13,880
-------- --------
Total liabilities 210,156 185,405
Stockholders' equity 19,753 17,827
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $229,909 $203,232
======== ========
Interest income as a percentage of average earning
assets 8.44% 7.45%
Interest expense as a percentage of average earning
assets (3.92) (2.94)
----- -----
NET INTEREST MARGIN 4.52% 4.51%
===== =====
==================================================================================================================================
</TABLE>
/a/ Average balances are obtained from the best available daily, weekly, or
monthly data.
/b/ Interest income and average rates are presented on a taxable-equivalent
basis. The taxable-equivalent adjustments are based on a marginal tax rate
of 35 percent.
/c/ Refer to the table on page 28 of the Balance Sheet Review section for more
detail on available-for-sale and held-to-maturity securities.
/d/ Average balances include nonaccrual assets.
/e/ Rates reflect a higher level of interest recoveries on nonaccrual loans
during the nine months ended September 30, 1995 as compared to the nine
months ended September 30, 1994.
22
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30
- -------------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------------
BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 5,816 $ 347 7.97% $ 4,596 $ 217 6.31%
600 27 5.98 1,478 44 3.93
9,029 471 6.98 6,185 245 5.30
8,952 545 8.14 6,695 351 7.01
9,707 568 7.81 9,436 412 5.83
7,385 405 7.32 11,598 638 7.33
35,089 1,826 6.94 31,549 1,389 5.87
13,879 946 9.12 13,129 763 7.77
8,057 912 15.09 7,173 850 15.80
13,655 1,011 9.89 11,565 866 10.02
30,590 1,953 8.53 22,016 1,089 6.61
10,525 716 9.07 9,203 545 7.89
3,410 289 11.34/e/ 3,979 223 7.48/e/
2,419 108 5.99 1,936 71 4.92
1,635 119 9.75 1,632 93 7.61
1,821 85 6.25 1,659 103 8.29
1,309 69 7.08 1,889 66 4.66
1,389 68 6.54 1,207 55 6.08
- --------- ------- -------- -------
123,778 8,102 8.74 106,937 6,113 7.63
21,476 1,324 8.24 18,099 902 6.67
- --------- ------- -------- -------
145,254 9,426 8.67 125,036 7,015 7.49
- --------- ------- -------- -------
186,743 $11,789 8.43 165,024 $ 8,922 7.22
======= =======
42,426 36,328
3,694 3,478
- --------- --------
$225,475 $197,874
========= ========
$ 13,266 $ 118 1.20% $ 13,789 $ 119 1.16%
13,662 212 2.08 14,506 221 2.04
29,337 649 2.96 32,817 603 2.45
30,077 1,087 4.83 27,208 554 2.72
- --------- ------- -------- -------
86,342 2,066 3.20 88,320 1,497 2.27
9,709 484 6.66 6,115 284 6.20
6,645 291 5.85 4,468 148 4.43
15,613 775 6.64 11,057 389 4.71
- --------- ------- -------- -------
31,967 1,550 6.48 21,640 821 5.07
- --------- ------- -------- -------
118,309 3,616 4.09 109,960 2,318 2.82
2,131 96 6.01 426 12 3.77
9,130 434 6.36 6,399 258 5.39
9,183 462 6.73 3,943 191 6.48
15,175 802 7.07 13,637 565 5.54
605 34 7.60 606 31 6.75
- --------- ------- -------- -------
154,533 $ 5,444 4.71 134,971 $ 3,375 3.34
======= =======
32,913 31,273
1,660 1,453
16,915 12,916
- --------- --------
206,021 180,613
19,454 17,261
- --------- --------
$225,475 $197,874
========= ========
8.43% 7.22%
(3.90) (2.73)
----- -----
4.53% 4.49%
===== =====
==================================================================================================================================
</TABLE>
23
<PAGE>
================================================================================
NONINTEREST Noninterest income for the third quarter and the first nine
INCOME months of 1995 increased $85 million and $301 million,
respectively, from the amounts reported in the corresponding
periods of 1994. Total fees and commissions for the third
quarter and first nine months of 1995 increased $74 million
and $255 million, respectively, from the amounts reported in
the corresponding periods in 1994. Retail deposit account
fees increased as a result of higher revenues from service
charges on deposit accounts and transactions, while
commercial deposit account fees increased due to the growth
in the number of commercial accounts. Syndication fees, which
are included in other fees and commissions, increased largely
as a result of expanded loan syndication volume. Off-balance-
sheet credit-related instrument fees and personal and other
trust fees increased primarily due to BAC's expanded
midwestern banking operations. Loan fees and charges
increased over year-to-date 1994 amounts due to higher
revenues from loan servicing fees resulting from expanded
mortgage banking activities. The increases discussed above
were partially offset by a decline in credit card membership
fees, which resulted from fee waivers granted to retain and
increase card membership in response to competitive market
conditions.
Trading income for the third quarter of 1995 and first nine
months of 1995 increased $12 million and $109 million,
respectively, from the same periods a year ago. The 1995
year-to-date increase was largely due to improved performance
in debt securities trading operations and increased volume on
foreign exchange products that resulted from strong global
demand in BAC's customer-driven businesses. In particular,
BAC benefited from gains on emerging market and Latin
American debt securities. For more information on the
functional components of trading income, refer to Note 11 of
the Notes to Consolidated Financial Statements on pages 10-
14.
Other noninterest income for the third quarter of 1995 was
essentially unchanged from the amount reported in the third
quarter of 1994. Other noninterest income for the first nine
months of 1995 decreased $63 million from the amount reported
in the comparable period of 1994. Significant asset
dispositions and sales occurred in 1994, while there was no
such comparable activity during the first nine months of
1995. As a result, income from assets pending disposition and
net gain on sales of assets decreased $116 million and $56
million, respectively. These decreases were largely offset by
a $148 million increase in venture capital activities, which
was attributable to higher realized capital gains and
partnership distributions. Third quarter and year-to-date
1995 other income included a $50 million gain from the sale
of an asset received in lieu of debt repayment, while other
income for the comparable periods in 1994 included gains on
the sales of an equity interest in Burns-Fry Holdings
Corporation and a Malaysian branch of $36 million and $34
million, respectively.
24
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
NONINTEREST INCOME
- -------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED
THIRD QUARTER SEPTEMBER 30
------------------- ------------------
(IN MILLIONS) 1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FEES AND COMMISSIONS
Deposit account fees:
Retail $ 238 $ 214 $ 687 $ 623
Commercial 91 87 282 262
Credit card fees:
Membership 12 18 39 62
Other 70 65 192 182
Trust fees:
Corporate and employee benefits 12 16 41 55
Personal and other 60 53 187 147
Other fees and commissions:
Loan fees and charges 74 75 242 211
Off-balance-sheet credit-related instrument fees 88 72 256 205
Mutual fund and annuity commissions 21 22 60 68
Other 140 110 407 323
- -------------------------------------------------------------------------------------------------------------------
806 732 2,393 2,138
- -------------------------------------------------------------------------------------------------------------------
Trading income 132 120 412 303
- -------------------------------------------------------------------------------------------------------------------
OTHER NONINTEREST INCOME
Income from assets pending
disposition - 15 11 127
Net gain on sales of assets/a/ 27 33 42 98
Venture capital activities 54 33 244 96
Net gain (loss) on sales of available-for-sale securities 17 (2) 27 25
Other income 121 141 259 300
- -------------------------------------------------------------------------------------------------------------------
219 220 583 646
- -------------------------------------------------------------------------------------------------------------------
$1,157 $1,072 $3,388 $3,087
- ----------------------------------------------------------------------=============================================
</TABLE>
/a/ Net gain on sales of assets includes gains and losses from the disposition
of loans, premises and equipment, and certain other assets.
- --------------------------------------------------------------------------------
NONINTEREST Noninterest expense for the third quarter of 1995 and the
EXPENSE first nine months of 1995 increased $58 million and $501
million, respectively, from the amounts reported in the
corresponding periods in 1994. Noninterest expense in the
third quarter and the first nine months of 1995 included a
$65 million refund received from the Federal Deposit
Insurance Corporation (FDIC), which is discussed below.
Noninterest expense for both the third quarter and first nine
months of 1994 included $50 million of merger-related charges
incurred in connection with the acquisition of Continental.
In addition, noninterest expense for the first nine months of
1994 included $83 million of capital additions to two Pacific
Horizon money market mutual funds, for which Bank of America
NT&SA serves as investment advisor.
Personnel expense (salaries and employee benefits) for the
third quarter of 1995 and the first nine months of 1995 was
up $107 million and $386 million, respectively, from the
amounts reported in the corresponding periods in 1994. These
increases were largely due to increases in base salaries
expense and incentive-based compensation. The increase in
base salaries expense was partially attributable to the
acquisitions of Continental and various mortgage banking
operations. BAC's staff level on a full-time-equivalent
(FTE) basis was approximately 80,200 at September 30, 1995,
down from approximately 81,900 at September 30, 1994. FTE is
a measurement equal to one full-time employee working a
standard day. BAC had approximately 95,500 employees at
September 30, 1995, down from approximately 98,600 at this
same date a year earlier. These amounts include both full-
time and part-time employees.
25
<PAGE>
================================================================================
Regulatory fees and related expenses for the third quarter of
1995 and the first nine months of 1995 decreased $65 million
and $61 million, respectively, from the comparable periods in
1994 as a result of the previously mentioned $65 million
refund received from the FDIC. Approximately $50 million of
this refund related to a reduction of third-quarter 1995
insurance rates, while the remaining portion was applicable to
payments made in the second quarter of 1995 for the month of
June. This refund resulted from a reduction in the FDIC
assessment rate on deposit insurance premiums paid to the Bank
Insurance Fund (BIF), as the FDIC achieved its mandated ratio
of BIF reserves to insured deposits of BIF members of 1.25
percent in May 1995.
Excluding the $50 million merger-related charge and the $83
million of capital additions to the Pacific Horizon funds that
occurred in 1994 as discussed on page 25, other expense for
the first nine months of 1995 increased $104 million over the
same period last year, primarily reflecting increased external
data processing and advertising expenses, and contributions
made to the BankAmerica Foundation.
In October 1995, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS No. 123).
This statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. SFAS
No. 123 is effective for fiscal years beginning after December
15, 1995 and will be adopted by BAC effective January 1, 1996.
BAC expects to follow the disclosure requirements of SFAS No.
123 and to continue to account for stock-based employee
compensation plans in accordance with Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to
Employees," as permitted by SFAS No. 123. BAC does not expect
that, at adoption, SFAS No. 123 will have an effect on its
financial position or results of operations.
<TABLE>
<CAPTION>
================================================================================
NONINTEREST EXPENSE
- --------------------------------------------------------------------------------
NINE MONTHS ENDED
THIRD QUARTER SEPTEMBER 30
-------------------- ------------------
(IN MILLIONS) 1995 1994 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salaries $ 839 $ 741 $2,490 $2,151
Employee benefits 195 186 571 524
Occupancy 185 171 540 503
Equipment 170 145 494 429
Amortization of intangibles 110 100 329 304
Communications 89 79 266 237
Professional services 78 54 223 165
Regulatory fees and related expenses 7 72 153 214
Net OREO expense 15 18 15 24
Other expense 305 369 954 983
- --------------------------------------------------------------------------------
$1,993 $1,935 $6,035 $5,534
- ------------------------------------============================================
</TABLE>
INCOME The provision for income taxes was $506 million and $384
TAXES million for the quarters ended September 30, 1995 and 1994,
reflecting a forecasted annual effective income tax rate of
41.8 percent for both periods. For further information
concerning BAC's provision for federal, state, and foreign
income taxes for the most recent five quarters, refer to Note
9 of the Notes to Consolidated Financial Statements on page 9.
26
<PAGE>
BALANCE SHEET REVIEW
================================================================================
Earning assets totaled $190.9 billion at September 30, 1995,
up $12.8 billion from $178.1 billion at year-end 1994. This
increase was primarily attributable to growth in the loan
portfolio, which increased $10.3 billion between year-end
1994 and September 30, 1995. Growth in earning assets was
largely funded by increases in other short-term borrowings,
which primarily resulted from issuances of bank notes and
commercial paper, and from increased foreign deposits.
During the first nine months of 1995, interest-bearing
deposits in foreign offices increased $8.1 billion. This
increase was largely due to BAC's continued expansion into
certain global markets and a shift from domestic to foreign
funding sources. Average domestic interest-bearing deposits
declined $6.5 billion, or 7 percent, between the fourth
quarter of 1994 and the third quarter of 1995. This decrease
was largely reflected in money market and time deposits and
was primarily attributable to competitive pressures in the
marketplace.
In March 1995, the FASB issued Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" (SFAS No. 121). In May 1995, the FASB issued Statement of
Financial Accounting Standards No. 122, "Accounting for
Mortgage Servicing Rights" (SFAS No. 122). SFAS No. 121 and
SFAS No. 122 are effective for fiscal years beginning after
December 15, 1995. BAC does not expect that, at adoption,
either SFAS No. 121 or SFAS No. 122 will have a material
effect on its financial position or results of operations.
27
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES - AVERAGE BALANCES, INTEREST, AND AVERAGE RATES
- ---------------------------------------------------------------------------------------------------------------------------------
THIRD QUARTER 1995 THIRD QUARTER 1994
--------------------------------------------- ---------------------------------------------
RATE RATE
RATE BASED ON RATE BASED ON
BASED ON AMORTIZED BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/ BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $1,644 $ 26 6.31% 6.30% $2,820 $ 40 5.57% 5.51%
Mortgage-backed securities 4,877 85 7.00 7.01 3,997 58 5.78 5.71
Other domestic securities 714 9 5.24 5.97 489 5 4.49 4.63
Foreign securities 2,722/c/ 80 11.62/d/ 10.77/d/ 1,865/c/ 31 6.60 5.93
- ----------------------------------------------------------------------------------------------------------------------------------
$9,957 $200 8.02% 7.93% $9,171 $134 5.81% 5.64%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
THIRD QUARTER 1995 THIRD QUARTER 1994
------------------------------- -------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other government agency securities $ 381 $ 7 6.78% $ 712 $ 12 6.91%
Mortgage-backed securities 4,494 80 7.16 7,255 130 7.19
State, county, and
municipal securities 441 8 7.26 472 10 8.04
Other domestic securities 177 3 7.37 213 4 7.13
Foreign securities 1,562 31 7.82 2,601 52 8.00
- -------------------------------------------------------------------------------------------------------------------------------
$7,055 $129 7.30% $11,253 $208 7.41%
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
--------------------------------------------------------------------------------------------------
1995 1994
--------------------------------------------- ---------------------------------------------
RATE RATE
RATE BASED ON RATE BASED ON
BASED ON AMORTIZED BASED ON AMORTIZED
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/ BALANCE/a/ INTEREST/b/ FAIR VALUE/b/ COST/b/
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE SECURITIES
U.S. Treasury and other
government agency securities $1,658 $ 81 6.55% 6.48% $3,266 $134 5.46% 5.48%
Mortgage-backed securities 4,973 259 6.95 6.87 3,988 165 5.52 5.51
Other domestic securities 640 25 5.19 5.76 406 14 4.66 4.87
Foreign securities 2,436/c/ 203 11.12/d/ 9.97/d/ 1,776/c/ 99 7.44 6.51
- ---------------------------------------------------------------------------------------------------------------------------------
$9,707 $568 7.81% 7.58% $9,436 $412 5.83% 5.68%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
--------------------------------------------------------------------------------------
1995 1994
---------------------------------- ----------------------------------
(DOLLAR AMOUNTS IN MILLIONS) BALANCE/a/ INTEREST/b/ RATE/b/ BALANCE/a/ INTEREST/b/ RATE/b/
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury and other government
agency securities $ 421 $ 21 6.79% $ 758 $ 38 6.66%
Mortgage-backed securities 4,597 246 7.14 7,719 418 7.21
State, county, and municipal securities 443 26 7.86 486 29 8.11
Other domestic securities 182 11 7.68 234 13 7.15
Foreign securities 1,742 101 7.73 2,401 140 7.82
- ---------------------------------------------------------------------------------------------------------------------------------
$7,385 $405 7.32% $11,598 $638 7.33%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Average balances are obtained from the best available daily, weekly, or
monthly data.
/b/ Interest income and average rates are presented on a taxable-equivalent
basis. The taxable-equivalent adjustments are based on a marginal tax rate
of 35 percent.
/c/ Average balances include nonaccrual assets.
/d/ Rates reflect interest received on nonaccrual debt-restructuring par
bonds.
28
<PAGE>
CREDIT RISK MANAGEMENT
================================================================================
LOAN PORTFOLIO Total loans at September 30, 1995 were up $10.3 billion, or 7
MANAGEMENT percent, from year-end 1994, reflecting continued growth in
both the domestic and foreign sectors. Average loans for the
third quarter of 1995 increased $3.0 billion from the
previous quarter.
Average total loans have increased over the past six
quarters. Continuation of this loan growth depends on both
future economic conditions as well as customer demand.
<TABLE>
<CAPTION>
===============================================================================================================================
LOAN OUTSTANDINGS
- -------------------------------------------------------------------------------------------------------------------------------
1995 1994
---------------------------------------------- ----------------------
(IN MILLIONS) SEPT. 30 JUNE 30 MARCH 31 DEC. 31 SEPT. 30
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $ 36,082 $ 35,564 $ 34,791 $ 33,818 $ 33,033
Residential junior mortgages 14,162 14,072 13,808 13,589 13,658
Other installment 12,728 11,819 10,989 10,598 9,921
Credit card 8,622 8,237 7,757 8,020 7,420
Other individual lines of credit 1,816 1,811 1,691 1,736 1,747
Other 289 305 409 403 470
- -------------------------------------------------------------------------------------------------------------------------------
73,699 71,808 69,445 68,164 66,249
Commercial:
Commercial and industrial 31,896 31,436 30,481 28,814 29,021
Loans secured by real estate 10,776 10,717 10,504 10,277 9,823
Construction and development loans
secured by real estate 3,214 3,308 3,526 3,616 3,929
Financial institutions 2,561 2,520 2,211 2,872 2,601
Agricultural 1,591 1,607 1,658 1,840 1,721
Lease financing 1,910 1,840 1,786 1,814 1,694
Loans for purchasing or carrying securities 1,236 1,383 1,348 1,529 1,495
Other 1,409 1,569 1,639 1,623 1,642
- -------------------------------------------------------------------------------------------------------------------------------
54,593 54,380 53,153 52,385 51,926
- -------------------------------------------------------------------------------------------------------------------------------
128,292 126,188 122,598 120,549 118,175
FOREIGN
Commercial and industrial 15,314 14,948 14,417 13,496 13,331
Banks and other financial institutions 2,795 2,941 2,871 2,516 2,629
Governments and official institutions 1,077 1,131 866 896 1,220
Other 3,734 3,558 3,407 3,455 3,336
- -------------------------------------------------------------------------------------------------------------------------------
22,920 22,578 21,561 20,363 20,516
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL LOANS 151,212 148,766 144,159 140,912 138,691
Less: Allowance for credit losses 3,655 3,695 3,725 3,690 3,625
- -------------------------------------------------------------------------------------------------------------------------------
$147,557 $145,071 $140,434 $137,222 $135,066
- --------------------------------------------===================================================================================
</TABLE>
29
<PAGE>
================================================================================
Domestic Consumer Loans -- The growth in domestic consumer
loans during the first nine months of 1995 included increases
in residential first mortgages, other installment loans, and
credit card loans of $2.3 billion, $2.1 billion, and $0.6
billion, respectively. The increase in residential first
mortgages reflected BAC's continued efforts to diversify its
nationwide lending activities. In particular, residential
first mortgage origination levels grew in the Northeast,
Northwest, and Southwest regions of the country. The increase
in other installment loans was largely due to an increase in
manufactured housing loans in the Southwestern and Midwestern
regions as a result of strong market demand. The increase in
credit card loans was largely attributable to an increase in
the number of accounts, which resulted from new co-branding
relationships and increased direct mail and branch
advertising. For information regarding BAC's domestic
residential first mortgages by geographic area and domestic
consumer loan delinquencies, refer to the tables below.
<TABLE>
<CAPTION>
=============================================================================
DOMESTIC RESIDENTIAL FIRST MORTGAGES BY GEOGRAPHIC AREA
- -----------------------------------------------------------------------------
1995
-----------------------------------
(IN MILLIONS) SEPT. 30 JUNE 30 MARCH 31
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
California $27,673/a/ $27,854/a/ $27,150/a/
Washington 1,645 1,578 1,459
Oregon 1,268 1,249 1,184
Arizona 1,120 1,082 983
Hawaii 1,012 1,037 1,027
Other/b/ 3,364 2,764 2,988
- -----------------------------------------------------------------------------
$36,082 $35,564 $34,791
- --------------------------------------------=================================
</TABLE>
/a/ Approximately 50 percent of domestic residential first mortgages in
California at September 30, 1995, June 30, 1995, and March 31, 1995 were
secured by properties in the following Southern California counties: Los
Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura.
/b/ No other state individually exceeded 2 percent of total domestic
residential first mortgages.
<TABLE>
<CAPTION>
=================================================================================================================================
DOMESTIC CONSUMER LOAN DELINQUENCY INFORMATION/a/
- ---------------------------------------------------------------------------------------------------------------------------------
1995 1994
----------------------------------- --------------------
(dollar amounts in millions) Sept. 30 June 30 March 31 Dec. 31 Sept. 30
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DELINQUENT CONSUMER LOANS
Residential first mortgages $644 $616 $595 $566 $563
Residential junior mortgages 92 95 95 92 85
Credit card 164 165 166 153 149
Other 81 65 72 69 64
- ---------------------------------------------------------------------------------------------------------------------------------
$981 $941 $928 $880 $861
- ---------------------------------------------------------------------============================================================
DELINQUENT CONSUMER LOAN RATIOS/b/
Residential first mortgages 1.79% 1.73% 1.71% 1.68% 1.71%
Residential junior mortgages 0.65 0.68 0.69 0.68 0.62
Credit card 1.91 2.00 2.14 1.91 2.01
Other 0.55 0.46 0.56 0.54 0.53
- ---------------------------------------------------------------------------------------------------------------------------------
1.33% 1.31% 1.34% 1.29% 1.30%
- ---------------------------------------------------------------------============================================================
</TABLE>
/a/ 60 days or more past due.
/b/ Ratios represent delinquency balances expressed as a percentage of total
loans for that loan category.
30
<PAGE>
================================================================================
Domestic Commercial Loans -- Commercial and industrial loans,
the largest sector of BAC's domestic commercial loan
portfolio, grew $3.1 billion between December 31, 1994 and
September 30, 1995. The increase in commercial and industrial
loans was primarily due to strong loan demand from large
corporate and middle market borrowers. In addition,
commercial loans secured by real estate increased $0.5
billion during the first nine months of 1995 due to increased
origination levels in western states other than California.
Partially offsetting these increases were declines in
construction and development loans secured by real estate and
loans to financial institutions of $0.4 million and $0.3
million, respectively. Construction and development loans
secured by real estate decreased as a result of a slowdown in
lending activities and the resolution of problem loans. Loans
to financial institutions decreased due to paydowns on
unsecured loans to U.S. non-bank financial entities.
<TABLE>
<CAPTION>
================================================================================================================================
Domestic Commercial Loans Secured by Real Estate by Geographic Area and Project Type at September 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
Medical &
Light Apartment & Dental
(in millions) Retail Office Industry Condominium Hotel Facilities Other Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California $1,691 $1,127 $1,025 $ 769 $142 $ 27 $ 723 $ 5,504/a/
Washington 397 431 442 414 140 106 357 2,287
Nevada 284 88 39 109 69 7 114 710
Oregon 86 39 63 126 32 6 42 394
Arizona 196 22 25 47 1 13 62 366
Other/b/ 248 515 68 143 304 8 229 1,515
- --------------------------------------------------------------------------------------------------------------------------------
$2,902 $2,222 $1,662 $1,608 $688 $167 $1,527 $10,776
- ---------------------------------------=========================================================================================
</TABLE>
/a/ Approximately 55 percent of domestic commercial loans secured by real
estate in California at September 30, 1995 were secured by properties in the
following Southern California counties: Los Angeles, Orange, San Bernardino,
San Diego, Riverside, and Ventura.
/b/ No other state individually exceeded 2 percent of total domestic
commercial loans secured by real estate.
<TABLE>
<CAPTION>
================================================================================================================================
DOMESTIC CONSTRUCTION AND DEVELOPMENT LOANS BY GEOGRAPHIC AREA AND PROJECT TYPE AT SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
APARTMENT & LIGHT
(IN MILLIONS) OFFICE SUBDIVISION RETAIL CONDOMINIUM HOTEL INDUSTRY OTHER TOTAL
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California $367 $375 $214 $139 $115 $ 91 $100 $1,401/a/
Washington 155 187 94 99 23 16 62 636
Nevada 33 36 59 42 13 10 18 211
Pennsylvania 203 - - - - - - 203
Arizona 8 55 38 35 2 5 11 154
Texas - 18 37 62 - - 5 122
Illinois 38 29 9 4 - - - 80
Georgia - 6 47 4 1 14 1 73
Other/b/ 45 42 156 53 - 7 31 334
- --------------------------------------------------------------------------------------------------------------------------------
$849 $748 $654 $438 $154 $143 $228 $3,214
- ------------------------------------------======================================================================================
</TABLE>
/a/ Approximately 70 percent of domestic construction and development loans
in California at September 30, 1995 were secured by properties in the
following Southern California counties: Los Angeles, Orange, San Bernardino,
San Diego, Riverside, and Ventura.
/b/ No other state individually exceeded 2 percent of total domestic
construction and development loans.
31
<PAGE>
================================================================================
Foreign Loans -- Foreign loan outstandings increased $2.6
billion between December 31, 1994 and September 30, 1995.
This growth was primarily reflected in a $1.8 billion
increase in foreign commercial and industrial loans, largely
resulting from increased loan demand in Asia.
- --------------------------------------------------------------------------------
EMERGING MARKET In connection with its effort to maintain a diversified
EXPOSURE portfolio, BAC attempts to limit its exposure to any one
country. BAC also strives to ensure that its exposure to
groups of borrowers that may be similarly affected by events
is limited. One such group is emerging market countries. As
shown in the table below, at September 30, 1995, BAC's
emerging market exposure totaled $8,598, or 4 percent of
total assets. This exposure represents loans, restructured
debt, which is included in the securities portfolios, and
other monetary assets.
<TABLE>
<CAPTION>
==========================================================================================================
EMERGING MARKET EXPOSURE
- ----------------------------------------------------------------------------------------------------------
September 30, 1995
--------------------------------------------------------------------------------
Loans Available-for-Sale Securities/a/
-------------------------- -----------------------------------
Medium-and
(in millions) Total/c/ Short-Term Long-Term Collateralized Uncollateralized
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mexico $2,558 $ 311 $ 557/d/ $286 $ 14
Brazil 1,405 588 18 29 83
India 825 407 - - -
Argentina 602 189 24 9 12
Chile 594 229 140 - -
Venezuela 518 5 20/d/ 87 -
Indonesia 394 352 - - -
Colombia 388 112 177 - -
China 365 303 17 - -
Philippines 326 79 21 18 30
Pakistan 205 28 1 - -
Other/e/ 418 57 68 125 15
- ----------------------------------------------------------------------------------------------------------
$8,598 $2,660/f/ $1,043/f/ $554/g/ $154/g/
- --------------------------================================================================================
<CAPTION>
Held-to-Maturity Securities/a/ Other/b/
------------------------------------ ---------------------------
Medium-and
Collateralized Uncollateralized Short-Term Long-Term
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mexico $ 856 $ 79 $ 438 $ 17
Brazil - 46 626 15
India - - 418 -
Argentina - 48 269 51
Chile - - 134 91
Venezuela 373 7 7 19
Indonesia - - 42 -
Colombia - 10 89 -
China - - 34 11
Philippines - - 165 13
Pakistan - - 176 -
Other/e/ - - 153 -
- --------------------------------------------------------------------------------------------
$1,229/h/ $190/h/ $2,551 $217
- -----------------------------===============================================================
</TABLE>
/a/ Represents medium- and long-term exposure.
/b/ Includes the following assets, primarily in U.S. dollars, with borrowers or
customers in a foreign country: accrued interest receivable, acceptances,
interest-bearing deposits with other banks, trading account assets, other
interest-earning investments, and other monetary assets.
/c/ Excludes local currency outstandings that were funded by local currency
borrowings as follows: $63 million for Mexico, $34 million for Brazil, $242
million for India, $9 million for Argentina, $229 million for Chile, $31
million for Venezuela, $81 million for Indonesia, $37 million for the
Philippines, and $70 million for Pakistan.
/d/ Mexico and Venezuela include $30 million and $4 million, respectively, of
loans that are collateralized by zero-coupon U.S. Treasury securities.
/e/ No other country individually exceeded 2 percent of total emerging market
exposure.
/f/ Total loans include nonaccrual loans of $72 million.
/g/ Total available-for-sale securities include $189 million of nonaccrual debt-
restructuring bonds.
/h/ The fair value of total held-to-maturity securities was approximately $898
million.
32
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
CROSS-BORDER OUTSTANDINGS EXCEEDING ONE PERCENT OF TOTAL ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
Cross-Border
Total Outstandings
Public Private Cross-Border as a Percentage
(DOLLAR AMOUNTS IN MILLIONS)/abcd/ Date Reported Sector/e/ Banks/e/ Sector/e/ Outstandings of Total Assets
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Japan SEPTEMBER 30, 1995 $ 6 $2,169 $2,081 $4,256 1.85%
June 30, 1995 10 1,784 2,004 3,798 1.68
March 31, 1995 9 1,667 2,558 4,234 1.90
December 31, 1994 17 1,248 2,292 3,557 1.65
September 30, 1994 18 1,339 2,131 3,488 1.63
Italy SEPTEMBER 30, 1995 $231 $ 130 $2,526 $2,887 1.26%
June 30, 1995 272 112 1,490 1,874 0.83
March 31, 1995 33 220 1,814 2,067 0.93
December 31, 1994 57 119 1,371 1,547 0.72
September 30, 1994 76 147 1,593 1,816 0.85
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Cross-border outstandings include the following assets, primarily in U.S.
dollars, with borrowers or customers in a foreign country: loans, accrued
interest, acceptances, interest-bearing deposits with other banks, trading
account assets, available-for-sale securities, held-to-maturity securities,
other interest-earning investments, and other monetary assets. Local
currency outstandings that are neither hedged nor funded by local currency
borrowings are included in cross-border outstandings. Guarantees of
outstandings of borrowers of other countries are considered outstandings of
the guarantor. Loans made to, or deposits placed with, a branch of a foreign
bank located outside the foreign bank's home country are considered loans or
deposits with the country in which the foreign bank is headquartered.
Outstandings of a country do not include amounts of principal or interest
that are supported by written, legally enforceable guarantees by guarantors
from other countries or the amount of outstandings to the extent that they
are secured by tangible, liquid collateral held and realizable by BAC
outside the country.
/b/ At September 30, 1995, total unfunded commitments of the countries listed
above, whose unfunded commitments exceeded 10 percent of their respective
cross-border outstandings, were as follows: Japan $757 million.
/c/ Included in the cross-border outstandings of the countries listed are loans
and other interest-bearing assets on nonaccrual status at September 30,
1995, June 30, 1995, March 31, 1995, December 31, 1994, and September 30,
1994, respectively, as follows: $18 million, $21 million, $20 million, $18
million, and $17 million for Japan.
/d/ Countries whose cross-border outstandings were between 0.75 percent and 1.00
percent of total assets were as follows: $2,172 million, $2,051 million,
$2,138 million, $1,799 million, and $1,690 million for South Korea at
September 30, 1995, June 30, 1995, March 31, 1995, December 31, 1994, and
September 30, 1994, respectively; $2,217 million, $2,201 million, $1,853
million, $1,982 million, and $2,088 million for Spain at September 30, 1995,
June 30, 1995, March 31, 1995, December 31, 1994, and September 30, 1994,
respectively; and $1,685 million for Hong Kong at September 30, 1994.
No other country excluded from this table had cross-border outstandings
between 0.75 percent and 1.00 percent of total assets for any of the periods
presented. However, not included in cross-border outstandings with Mexico
were par bonds issued by the government of Mexico with face values of $1,341
million at September 30, 1995, June 30, 1995, March 31, 1995, December 31,
1994, and September 30, 1994. The par bonds had a carrying value of $1,142
million at September 30, 1995, $1,141 million at June 30, 1995, $1,077
million at March 31, 1995, $1,109 million at December 31, 1994, and $1,162
million at September 30, 1994. At September 30, 1995, the par bonds had a
total fair value of approximately $848 million. In accordance with Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," certain of these par bonds were
recorded in available-for-sale securities and carried at their fair value of
$286 million at September 30, 1995, while the remainder of these par bonds
were recorded in held-to-maturity securities at their amortized cost.
Principal repayment of these par bonds is collateralized by zero-coupon U.S.
Treasury securities that, at maturity in 2008 and 2019, will have a
redemption value equal to the face value of the par bonds. At September 30,
1995, this collateral had a fair value of approximately $290 million. Future
interest payments for a rolling eighteen-month period are also
collateralized by additional U.S. dollar-denominated securities permitted by
the agreement. The details of the transaction in which the majority of these
par bonds were acquired were reported in the Parent's Annual Report on Form
10-K for the year ended December 31, 1990. Mexico's cross-border
outstandings also excluded additional securities of $30 million at September
30, 1995, June 30, 1995, March 31, 1995, December 31, 1994, and September
30, 1994, which are fully collateralized at maturity by separate zero-coupon
U.S. Treasury securities. Had these par bonds and other instruments been
included, total cross-border outstandings with Mexico would have exceeded
1.00 percent of total assets for all periods presented.
/e/ Sector definitions are based on Federal Financial Institutions Examination
Council Instructions for preparing the Country Exposure Report.
33
<PAGE>
================================================================================
ALLOWANCE The allowance for credit losses at September 30, 1995 was
FOR CREDIT LOSSES $3,655 million, or 2.42 percent of loan outstandings,
compared with $3,690 million, or 2.62 percent, at
December 31, 1994. Excluding outstandings in the residential
first mortgage portfolio and the portion of the allowance
associated with these outstandings, the ratios were 3.08
percent and 3.36 percent of loans at September 30, 1995 and
December 31, 1994, respectively. In addition, BAC's ratio of
the allowance for credit losses to total nonaccrual assets
was 197 percent at September 30, 1995, up from 177 percent at
December 31, 1994.
Management develops the allowance using a "building block
approach" for various portfolio segments. The allowance is
established by credit officers for each portfolio segment.
Significant loans are individually analyzed, while other
loans are analyzed by portfolio segment. In establishing the
allowance for the portfolio segments, credit officers
initially employ results from statistical models using
historical loan performance data. While management has
allocated reserves to various portfolio segments, the
allowance is general in nature and is available for the loan
portfolio in its entirety.
<TABLE>
<CAPTION>
=============================================================================================================================
COMPOSITION OF ALLOWANCE FOR CREDIT LOSSES
- -----------------------------------------------------------------------------------------------------------------------------
1995 1994
--------------------------------------- -----------------------
(IN MILLIONS) Sept. 30 June 30 March 31 Dec. 31 Sept. 30
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Special mention and classified:
Historical loss experience component $ 483 $ 472 $ 473 $ 516 $ 292
Credit management allocated component 439 410 410 428 626
- -----------------------------------------------------------------------------------------------------------------------------
Total special mention and classified 922 882 883 944 918
Other:
Domestic consumer 1,189 1,143 1,081 1,059 1,048
Domestic commercial 231 219 224 223 225
Foreign 317 331 324 270 189
- -----------------------------------------------------------------------------------------------------------------------------
Total allocated 2,659 2,575 2,512 2,496 2,380
Unallocated 996 1,120 1,213 1,194 1,245
- -----------------------------------------------------------------------------------------------------------------------------
$3,655 $3,695 $3,725 $3,690 $3,625
- --------------------------------------------------------=====================================================================
</TABLE>
Net credit losses for the third quarter of 1995 increased
$45 million from the amount reported in the same period a
year ago. This increase resulted primarily from higher net
credit losses in the foreign, commercial and industrial,
credit card, and other consumer portfolios, partially offset
by lower charge-offs in the construction and development
loans secured by real estate portfolio. Net credit losses for
the first nine months of 1995 declined $76 million from the
amount reported for the comparable period of 1994. This
decline was largely due to a $69 million increase in net
credit recoveries in the foreign portfolio. These
improvements were primarily due to recoveries on borrowers in
Brazil and Ecuador and from an allocated transfer risk
reserve adjustment that occurred during the second quarter of
1995.
34
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
QUARTERLY CREDIT LOSS EXPERIENCE
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 NINE MONTHS ENDED
----------------------------- ------------------ SEPTEMBER 30
THIRD SECOND FIRST FOURTH THIRD ---------------
(DOLLAR AMOUNTS IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
Balance, beginning of period $ 3,695 $ 3,725 $ 3,690 $ 3,625 $ 3,414 $ 3,690 $ 3,508
CREDIT LOSSES
Domestic consumer:
Residential first mortgages 12 11 14 15 14 37 34
Residential junior mortgages 19 19 17 20 18 55 68
Credit card 101 99 86 91 93 286 291
Other consumer 61 54 54 55 55 169 176
Domestic commercial:
Commercial and industrial 19 20 18 9 9 57 38
Loans secured by real estate 7 24 9 7 9 40 45
Construction and development loans secured by real estate 8 11 11 9 42 30 77
Financial institutions 1 - - 1 - 1 1
Agricultural - 1 2 6 - 3 2
Lease financing - - - 1 - - -
Foreign 27 (26)/a/ 1 2 7 2 40
- -----------------------------------------------------------------------------------------------------------------------------------
Total credit losses 255 213 212 216 247 680 772
CREDIT LOSS RECOVERIES
Domestic consumer:
Residential first mortgages - 1 - 3 1 1 1
Residential junior mortgages 3 5 4 4 4 12 14
Credit card 10 12 12 12 19 34 42
Other consumer 18 19 19 19 26 56 68
Domestic commercial:
Commercial and industrial 13 16 32 19 34 61 75
Loans secured by real estate 3 4 3 8 6 10 17
Construction and development loans secured by real estate 41 14 8 18 22 63 64
Financial institutions 2 2 - 10 2 4 6
Agricultural 2 1 2 2 2 5 6
Lease financing 1 1 2 2 1 4 4
Foreign 11 8 53 83 24 72 41
- -----------------------------------------------------------------------------------------------------------------------------------
Total credit loss recoveries 104 83 135 180 141 322 338
- -----------------------------------------------------------------------------------------------------------------------------------
Total net credit losses 151 130 77 36 106 358 434
Provision for credit losses 110 100 100 100 110 310 360
Allowance related to mergers and acquisitions/b/ - - 3 - 241 3 241
Other net additions (deductions) 1 - 9 1 (34) 10 (50)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD $ 3,655 $ 3,695 $ 3,725 $ 3,690 $ 3,625 $ 3,655 $ 3,625
- ----------------------------------------------------------=========================================================================
ANNUALIZED RATIO OF NET CREDIT LOSSES (RECOVERIES)
TO AVERAGE LOAN OUTSTANDINGS
Domestic consumer:
Residential first mortgages 0.13% 0.12% 0.16% 0.15% 0.16% 0.14% 0.14%
Residential junior mortgages 0.45 0.42 0.38 0.46 0.41 0.42 0.55
Credit card 4.28 4.41 3.84 4.11 4.05 4.18 4.64
Other consumer 1.20 1.01 1.10 1.13 0.98 1.11 1.24
Domestic commercial:
Commercial and industrial 0.07 0.06 (0.20) (0.14) (0.40) (0.02) (0.22)
Loans secured by real estate 0.16 0.74 0.24 (0.04) 0.11 0.38 0.41
Construction and development loans secured by real estate (3.97) (0.36) 0.33 (0.86) 2.07 (1.30) 0.42
Financial institutions (0.26) (0.31) - (1.22) (0.26) (0.20) (0.36)
Agricultural (0.42) - - 0.79 (0.37) (0.20) (0.28)
Lease financing (0.17) (0.16) (0.36) (0.25) (0.31) (0.23) (0.31)
Total domestic 0.42 0.53 0.43 0.39 0.44 0.46 0.54
Foreign 0.29 (0.62) (1.03) (1.62) (0.37) (0.43) (0.01)
TOTAL 0.40 0.36 0.22 0.10 0.32 0.33 0.46
RATIO OF ALLOWANCE TO LOANS AT QUARTER END 2.42 2.48 2.58 2.62 2.61 2.42 2.61
EARNINGS COVERAGE OF NET CREDIT LOSSES/c/ 8.75x 9.25x 14.96x 31.00x 9.82x 10.27x 7.10x
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Represents an allocated transfer risk reserve adjustment.
/b/ Represents the addition of consummation date allowances for credit losses of
Arbor National Holdings, Inc. in the first quarter of 1995, and Continental
and Liberty Bank of $238 million and $3 million, respectively, in the third
quarter of 1994.
/c/ Earnings coverage of net credit losses is calculated as income before income
taxes plus the provision for credit losses as a multiple of net credit
losses.
35
<PAGE>
================================================================================
NONPERFORMING Total nonaccrual assets decreased $225 million, or 11
ASSETS percent, between year-end 1994 and September 30, 1995. This
decrease reflected improvements in certain segments of the
credit portfolio, particularly in construction and
development loans secured by real estate and foreign loans.
These improvements were primarily due to full or partial
payments on nonaccrual loans and the restoration of
nonaccrual loans to accrual status. Decreases due to
improvements in credit quality were partially offset by
growth in nonaccrual domestic commercial and industrial
loans, which reflected the placement of certain large
corporate borrowers on nonaccrual status during the second
and third quarters of 1995.
BAC's nonperforming assets ratios also improved during the
first nine months of 1995. The ratio of nonperforming assets
(comprised of nonaccrual assets and other real estate owned)
to total assets declined 19 basis points from year-end 1994
to 1.03 percent at September 30, 1995. In addition, at
September 30, 1995, the ratio of nonaccrual loans to total
loans was 1.22 percent, down from 1.48 percent at December
31, 1994. Management believes that improvement in credit
quality may not continue in the future.
Other real estate owned (OREO) was $509 million at September
30, 1995, down $46 million, or 8 percent, from $555 million
at December 31, 1994. This decline was primarily attributable
to sales and net writedowns.
Effective January 1, 1995, BAC adopted SFAS No. 114. The
adoption of SFAS No. 114 did not have a material effect on
BAC's financial position or results of operations. Impaired
loans amounted to $1,333 million at September 30, 1995. For
more information on the adoption of this Statement, refer to
Note 4 of the Notes to Consolidated Financial Statements on
pages 7 and 8.
For further information concerning nonaccrual assets, refer
to the tables below and on pages 37 and 38.
<TABLE>
<CAPTION>
==========================================================================================================
ANALYSIS OF CHANGE IN NONACCRUAL ASSETS
- ----------------------------------------------------------------------------------------------------------
1995 1994
----------------------------------- ---------------------
THIRD SECOND FIRST FOURTH THIRD
(IN MILLIONS) QUARTER QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of quarter $1,962 $1,935 $2,080 $2,084 $2,222
Additions:
Loans placed on nonaccrual status 392 333 175 362 200
Acquired in the Continental merger - - - - 245
Deductions:
Sales (8) (1) (5) (9) (167)
Restored to accrual status (151) (86) (92) (107) (145)
Foreclosures (55) (11) (15) (32) (19)
Charge-offs (35) (42) (19) (19) (47)
Other, primarily payments (250) (166) (189) (199) (205)
- ----------------------------------------------------------------------------------------------------------
BALANCE, END OF QUARTER $1,855 $1,962 $1,935 $2,080 $2,084
- ----------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
NONACCRUAL ASSETS, RESTRUCTURED LOANS, AND LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
- ---------------------------------------------------------------------------------------------------------------------------------
1995 1994
--------------------------------------- -----------------------
(IN MILLIONS) SEPT. 30 JUNE 30 MARCH 31 DEC. 31 SEPT. 30
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NONACCRUAL ASSETS
Domestic consumer loans:
Residential first mortgages $ 314 $ 310 $ 311 $ 319 $ 359
Residential junior mortgages 67 67 65 56 44
Other consumer 3 4 10 7 5
Domestic commercial loans:
Commercial and industrial 645 609 429 453 352
Loans secured by real estate 329 336 341 347 412
Construction and development loans secured by real estate 271 418 549 647 672
Financial institutions 2 3 4 3 12
Agricultural 35 32 36 31 45
Lease financing 1 1 1 1 13
- ---------------------------------------------------------------------------------------------------------------------------------
1,667 1,780 1,746 1,864 1,914
Foreign loans:
Commercial and industrial 151 134 133 157 95
Banks and other financial institutions - 11 19 22 10
Governments and official institutions 24 27 28 24 17
Other 10 10 9 12 30
- ---------------------------------------------------------------------------------------------------------------------------------
185 182 189 215 152
Other interest-bearing assets 3 - - 1 18
- ---------------------------------------------------------------------------------------------------------------------------------
$1,855/a/ $1,962/a/ $1,935/a/ $2,080/a/ $2,084/a/
- -------------------------------------------------------------====================================================================
RESTRUCTURED LOANS
Domestic commercial:
Commercial and industrial $ 78 $ 72 $ 73 $ 71 $ 79
Loans secured by real estate 19 16 13 15 11
Construction and development loans secured by real estate 3 1 9 2 2
Agricultural 1 9 13 7 1
Lease financing - - - - 1
- ---------------------------------------------------------------------------------------------------------------------------------
101 98 108 95 94
Foreign/b/ 1 1 1 2 36
- ---------------------------------------------------------------------------------------------------------------------------------
$ 102 $ 99 $ 109 $ 97 $ 130
- -------------------------------------------------------------====================================================================
LOANS PAST DUE 90 DAYS OR MORE AND STILL ACCRUING INTEREST
Domestic consumer:
Residential first mortgages $ 181 $ 172 $ 142 $ 133 $ 91
Residential junior mortgages 19 7 10 23 21
Other consumer 141 142 137 136 126
Domestic commercial:
Commercial and industrial 30 65 15 25 76
Loans secured by real estate 62 19 20 54 70
Construction and development loans secured by real estate 4 33 35 38 34
Financial institutions 1 19 - 16 -
Agricultural - 1 - 8 -
Lease financing - - - 1 -
- ---------------------------------------------------------------------------------------------------------------------------------
438 458 359 434 418
Foreign 1 1 10 2 2
- ---------------------------------------------------------------------------------------------------------------------------------
$ 439 $ 459 $ 369 $ 436 $ 420
- -------------------------------------------------------------====================================================================
</TABLE>
/a/ Excludes certain nonaccrual debt-restructuring par bonds and other
instruments that were included in available-for-sale and held-to-maturity
securities of $189 million at September 30, 1995, $296 million at June 30,
1995, $367 million at March 31, 1995, $441 million at December 31, 1994, and
$393 million at September 30, 1994. Also excludes certain other nonaccrual
loans and other instruments issued by various governments of $3 million at
September 30, 1995, $3 million at June 30, 1995, $3 million at March 31,
1995, $8 million at December 31, 1994, and $44 million at September 30, 1994
that were included in other assets at the lower of cost or fair value.
/b/ Excludes debt restructurings with countries that have experienced liquidity
problems of $1.9 billion at September 30, 1995, $2.1 billion at June 30,
1995, $1.8 billion at March 31, 1995 and December 31, 1994, and $1.9 billion
at September 30, 1994. The majority of these instruments were classified as
either available-for-sale or held-to-maturity securities.
37
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
INTEREST INCOME FOREGONE ON NONACCRUAL ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED
(IN MILLIONS) SEPTEMBER 30, 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
DOMESTIC
Interest income that would have been recognized had the assets
performed in accordance with their original terms $ 241
Less: Interest income included in the results of operations 66
- -----------------------------------------------------------------------------------------------------------------------------------
Domestic interest income foregone 175
FOREIGN
Interest income that would have been recognized had the assets
performed in accordance with their original terms 20
Less: Interest income included in the results of operations 15
- -----------------------------------------------------------------------------------------------------------------------------------
Foreign interest income foregone 5
- -----------------------------------------------------------------------------------------------------------------------------------
$ 180
- ------------------------------------------------------------------------------------------------------------------------------=====
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================================================
CASH INTEREST PAYMENTS ON NONACCRUAL ASSETS BY LOAN TYPE/a/
- -----------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED
SEPTEMBER 30, 1995
SEPTEMBER 30, 1995 ---------------------------------------
------------------------------------------------------------- CASH INTEREST
CUMULATIVE BOOK AS A AVERAGE PAYMENTS APPLIED
CONTRACTUAL INTEREST NONACCRUAL PERCENTAGE NONACCRUAL ---------------------------
PRINCIPAL CUMULATIVE APPLIED BOOK OF BOOK AS INTEREST
(DOLLAR AMOUNTS IN MILLIONS) BALANCE CHARGE-OFFS TO PRINCIPAL BALANCE CONTRACTUAL BALANCE INCOME OTHER/B/ TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DOMESTIC
Consumer:
Residential first mortgages $ 316 $ 1 $ 1 $ 314 99% $ 315 $ 7 $ - $ 7
Residential junior mortgages 69 2 - 67 97 64 4 - 4
Other consumer 19 14 2 3 16 5 - - -
Commercial:
Commercial and industrial 1,154 401 108 645 56 521 20 25 45
Loans secured by real estate 547 180 38 329 60 338 15 12 27
Construction and development
loans secured by real estate 516 219 26 271 53 481 16 11 27
Financial institutions 12 7 3 2 17 3 - - -
Agricultural 57 15 7 35 61 36 4 2 6
Lease financing 1 - - 1 100 1 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
2,691 839 185 1,667 62 1,764 66 50 116
FOREIGN
Commercial and industrial 303 127 25 151 50 145 11 5 16
Banks and other financial
institutions 5 1 1 3 60 12 1 1 2
Governments and official
institutions 37 13 - 24 65 26 3 - 3
Other 35 22 3 10 29 10 - 1 1
- -----------------------------------------------------------------------------------------------------------------------------------
380 163 29 188 49 193 15 7 22
- -----------------------------------------------------------------------------------------------------------------------------------
$3,071 $1,002 $214 $1,855 60% $1,957 $81 $57 $ 138
- -----------------------------------================================================================================================
CASH YIELD ON AVERAGE TOTAL NONACCRUAL BOOK BALANCE 9.43%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Includes information related to all nonaccrual loans including those that
are fully charged off or otherwise have a book balance of zero.
/b/ Primarily represents cash interest payments applied to principal. Also
includes cash interest payments accounted for as credit loss recoveries,
which are recorded as increases to the allowance for credit losses.
38
<PAGE>
FOREIGN EXCHANGE AND DERIVATIVES CONTRACTS
================================================================================
BAC uses foreign exchange and derivatives contracts in both
its trading and its asset and liability management
activities. Foreign exchange and derivatives contracts
include futures, forwards, swaps, and options contracts, all
of which derive their value from underlying interest rates,
foreign exchange rates, commodity values, or equity
instruments. Certain transactions involve standardized
contracts executed on organized exchanges, while other
transactions are negotiated over-the-counter, with the terms
tailored to meet the needs of BAC and its clients.
Counterparties to BAC's foreign exchange and derivatives
contracts generally include U.S. and foreign banks, nonbank
financial institutions, corporations, governments, and asset
managers.
BAC earns trading revenue by executing transactions to
support customers' risk management needs, by efficiently
managing the positions that result from these transactions,
and by making markets in a wide variety of trading products.
Using its expertise and global presence, BAC executes foreign
exchange and derivatives transactions to aid its customers in
managing their risk exposures to interest rates, exchange
rates, prices of securities, and financial or commodity
indices.
BAC also acts as an end-user by employing foreign exchange
and derivatives contracts in connection with its own asset
and liability management, primarily through hedging
activities. More specifically, BAC primarily uses interest
rate derivatives instruments to manage the interest rate risk
associated with its assets and liabilities, including
residential loans, long-term debt, and deposits.
Similar to on-balance-sheet financial instruments such as
loans and investment securities, off-balance-sheet financial
instruments are subject to various types of risks. These
risks include credit risk (the risk that a loss may occur
from the failure of a customer to perform according to the
terms of the contract), market risk (the sensitivity of
future earnings to price or rate changes), liquidity risk
(the risk of BAC being unable to meet its funding
requirements or execute a transaction at a reasonable price),
and operational risk (the risk that inadequate internal
controls, procedures, human error, system failure, or fraud
can result in unexpected losses). For a detailed discussion
of these risks and how they are managed, refer to pages 28-30
and 39-43 of BAC's 1994 Annual Report to Shareholders.
For additional information concerning foreign exchange and
derivatives contracts, including their respective notional,
credit risk, credit exposure, and fair value amounts, refer
to Note 11 of the Notes to Consolidated Financial Statements
on pages 10-14.
39
<PAGE>
INTEREST RATE RISK MANAGEMENT
================================================================================
BAC's governing interest rate risk management objective is to
minimize the potential for significant loss. Risk is measured
in terms of potential impact on both BAC's economic value and
reported earnings. Economic value calculations measure
changes in the present value of future net cash flows from
all assets and liabilities until maturity. Those changes can
result from interest rate movements or from altered
expectations of future market conditions. BAC measures
earnings variability by estimating the potential effect of
changes in interest rates on projected net income over a
three-year period.
BAC measures and manages interest rate risk by type of risk.
To minimize exposures to declines in economic value due to
gap risk, BAC's policy is that assets and liabilities must
have approximately equal total duration. An internally
developed methodology is used to translate each rate maturity
mismatch or gap into a one-year position that would have the
same estimated risk content. For example, a six-month
mismatch of $200 million is treated as having approximately
the same risk content as a $100 million one-year mismatch. As
shown in the following graph, BAC's net one-year position has
been essentially balanced throughout the last four years.
<TABLE>
<CAPTION>
Net Interest Rate Risk Position (plot point graph in
non-EDGAR version)
(in billions of dollars) 12/31/91 12/31/92 12/31/93 12/31/94 9/30/95
<S> <C> <C> <C> <C> <C>
Net Interest Rate Risk Position $ (8.1) $ (6.9) $ 1.0 $ (2.8) $ (1.2)
</TABLE>
Graph indicates the composite long(+) or short(-) position
measured across the entire maturity mismatch profile and
expressed as a one-year mismatch position bearing the same
aggregate level of risk.
Gap mismatches result from timing differences in the
repricing or maturing of assets, liabilities, and off-
balance-sheet financial instruments. Expected interest rate
sensitivity of individual categories of U.S. dollar-
denominated assets and liabilities as of September 30, 1995
is shown in the table on page 41.
40
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================
U.S. DOLLAR DENOMINATED INTEREST RATE SENSITIVITY BY REPRICING OR MATURITY DATES
- -----------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 1995
--------------------------------------------------------------
(GREATER THAN) (GREATER THAN) OVER
(DOLLAR AMOUNTS IN MILLIONS) 0-6 MONTHS 6-12 MONTHS 1-5 YEARS 5 YEARS TOTAL
<S> <C> <C> <C> <C> <C>
DOMESTIC ASSETS
Interest-bearing deposits in banks $ 8 $ - $ - $ - $ 8
Federal funds sold and securities
purchased under resale agreements 1,163 - - - 1,163
Trading account securities 1,028 - - - 1,028
Loans:
Prime indexed 17,967 - - - 17,967
Adjustable rate residential first mortgages 10,668 5,290 7,323 6,282 29,563
Other loans, net 38,303 5,266 16,088 9,013 68,670
Other assets 22,415 644 11,806 8,015 42,880
- -----------------------------------------------------------------------------------------------------------------
Domestic Assets 91,552 11,200 35,217 23,310 161,279
- -----------------------------------------------------------------------------------------------------------------
DOMESTIC LIABILITIES AND STOCKHOLDERS' EQUITY
Domestic deposits (61,672) (11,200) (23,229) (18,522) (114,623)
Other short-term borrowings (8,481) (600) - - (9,081)
Long-term debt and subordinated capital notes (7,308) (603) (2,250) (5,486) (15,647)
Other liabilities and stockholders' equity (9,869) (173) (9,474) (15,310) (34,826)
- -----------------------------------------------------------------------------------------------------------------
Domestic Liabilities and Stockholders' Equity (87,330) (12,576) (34,953) (39,318) (174,177)
OFFSHORE FUNDING BOOKS, NET (1,998) 278 420 1,300 -
- -----------------------------------------------------------------------------------------------------------------
Core Gap Before Risk Management Positions 2,224 (1,098) 684 (14,708) (12,898)
- -----------------------------------------------------------------------------------------------------------------
INTEREST RATE RISK MANAGEMENT POSITIONS
- -----------------------------------------------------------------------------------------------------------------
Investment securities/a/ 1,521 1,362 4,899 5,116 12,898
Off-balance-sheet financial instruments/b/ (8,749) 3,552 (2,747) 7,944 -
- -----------------------------------------------------------------------------------------------------------------
Total Interest Rate Risk Management Positions (7,228) 4,914 2,152 13,060 12,898
- -----------------------------------------------------------------------------------------------------------------
Net Gap (5,004) 3,816 2,836 (1,648) -
- -----------------------------------------------------------------------------------------------------------------
Cumulative Gap $ (5,004) $ (1,188) $ 1,648 $ - $ -
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Available-for-sale and held-to-maturity securities.
/b/ Represents the repricing effect of off-balance-sheet positions, which
include interest rate swaps, futures contracts, and similar agreements.
At September 30, 1995, BAC had a "core" imbalance before risk
management positions as liabilities and equity exceeded
assets by approximately $13 billion. BAC's risk management
activities eliminated this imbalance while reducing gaps in
individual repricing periods. Investment securities and
"receive fixed" swaps essentially neutralized core gaps
beyond one year.
41
<PAGE>
FUNDING AND CAPITAL
================================================================================
LIQUIDITY Liquid assets consist of cash and due from banks, interest-
REVIEW bearing deposits in banks, federal funds sold, securities
purchased under resale agreements, trading account assets,
and available-for-sale securities. At September 30, 1995,
liquid assets totaled $45.3 billion, up $2.6 billion from the
amount reported at year-end 1994. This growth in liquid
assets can be primarily attributed to increases in trading
account assets and securities purchased under resale
agreements, partially offset by decreases in cash and due
from banks and interest-bearing deposits in banks.
- --------------------------------------------------------------------------------
CAPITAL At September 30, 1995, stockholders' equity totaled $19.9
MANAGEMENT billion, up from $18.9 billion at December 31, 1994. Common
equity increased $1.4 billion during the first nine months of
1995, while preferred stock declined $0.4 billion.
Common equity increased $1.3 billion due to year-to-date 1995
earnings net of preferred and common stock dividends. In
addition, common equity increased $0.5 billion due to the
issuance of 2.9 million shares in connection with the
acquisition of Arbor National Holdings, Inc. during the first
quarter of 1995 and 5.4 million shares issued in connection
with the conversion of 99 percent of BAC's 6 1/2% Cumulative
Convertible Preferred Stock, Series G to common stock during
the second quarter of 1995. Also, during the first nine
months of 1995, the net unrealized loss on available-for-sale
securities decreased $275 million. These increases in common
equity were partially offset by the common stock repurchases
discussed below.
In connection with its previously announced stock repurchase
program, BAC repurchased 3.5 million shares of its common
stock during the third quarter of 1995 at an average per-
share price of $57.48. These shares were repurchased on the
open market over 26 trading days and represented
approximately 5 percent of the total volume of BAC common
stock traded on those days. Year-to-date common stock
repurchases under this program totaled 13.0 million shares at
an average per-share price of $51.58. For additional
information regarding the stock repurchase program, refer to
Note 7 of the Notes to Consolidated Financial Statements on
page 9.
Preferred stock decreased $445 million during the first nine
months of 1995. This decline resulted from the redemption of
all outstanding shares of BAC's 11% Cumulative Fixed
Preferred Stock, Series I, on September 30, 1995, and the
conversion and redemption of BAC's 6 1/2% Cumulative
Convertible Preferred Stock, Series G and its Adjustable Rate
Preferred Stock, Series 1 during the second quarter of 1995.
For additional information regarding these preferred stock
transactions, refer to Note 8 of the Notes to Consolidated
Financial Statements on Page 9.
42
<PAGE>
<TABLE>
<CAPTION>
===============================================================================================================================
RISK-BASED CAPITAL, RISK-WEIGHTED ASSETS, AND RISK-BASED CAPITAL RATIOS
- -------------------------------------------------------------------------------------------------------------------------------
1995 1994
------------------------------------- ----------------------
(DOLLAR AMOUNTS IN MILLIONS) SEPT. 30 JUNE 30 MARCH 31 DEC. 31 SEPT. 30
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RISK-BASED CAPITAL
Common stockholders' equity $ 17,289 $ 16,966 $ 16,433 $ 16,149 $ 15,763
Perpetual preferred stock 2,623 2,723 3,068 3,068 3,368
Less: Goodwill, nongrandfathered core deposit and
other identifiable intangibles, and other deductions/a/ (5,352) (5,409) (5,550) (5,559) (5,701)
- -------------------------------------------------------------------------------------------------------------------------------
Tier 1 capital 14,560 14,280 13,951 13,658 13,430
Eligible portion of the allowance for credit losses 2,526 2,506 2,419 2,366 2,355
Hybrid capital instruments 214 264 336 336 337
Subordinated notes and debentures 5,865 5,717 5,724 5,707 5,558
Less: Other deductions (148) (142) (145) (114) (104)
- -------------------------------------------------------------------------------------------------------------------------------
Tier 2 capital 8,457 8,345 8,334 8,295 8,146
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RISK-BASED CAPITAL $ 23,017 $ 22,625 $ 22,285 $ 21,953 $ 21,576
- ----------------------------------------------------------=====================================================================
RISK-WEIGHTED ASSETS
Balance-sheet assets:
Trading account assets $ 3,457 $ 3,384 $ 2,768 $ 2,773 $ 2,408
Available-for-sale and held-to-maturity securities 5,238 5,314 5,157 4,950 5,149
Loans 128,826 126,437 123,443 120,808 118,448
Other assets 17,026 17,929 16,512 15,924 16,564
- -------------------------------------------------------------------------------------------------------------------------------
Total balance-sheet assets 154,547 153,064 147,880 144,455 142,569
- -------------------------------------------------------------------------------------------------------------------------------
Off-balance-sheet items:
Credit-related financial instruments 40,975 40,155 37,576 37,024 36,810
Foreign exchange and derivatives contracts 4,927 5,543 6,225 5,638 6,807
Securities lent 215 287 281 693 772
- -------------------------------------------------------------------------------------------------------------------------------
Total off-balance-sheet items 46,117 45,985 44,082 43,355 44,389
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RISK-WEIGHTED ASSETS $200,664 $199,049 $191,962 $187,810 $186,958
- ----------------------------------------------------------=====================================================================
RISK-BASED CAPITAL RATIOS
Tier 1 capital 7.26% 7.17% 7.27% 7.27% 7.18%
Tier 2 capital 4.21 4.20 4.34 4.42 4.36
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RISK-BASED CAPITAL RATIO 11.47% 11.37% 11.61% 11.69% 11.54%
- ----------------------------------------------------------=====================================================================
TIER 1 LEVERAGE RATIO 6.80% 6.68% 6.84% 6.74% 6.59%/b/
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/a/ Includes nongrandfathered CDI and other identifiable intangibles acquired
after February 19, 1992 of $877 million and $90 million, respectively, at
September 30, 1995, $897 million and $93 million, respectively, at June 30,
1995, $915 million and $97 million, respectively, at March 31, 1995, $937
million and $100 million, respectively, at December 31, 1994, and $953
million and $110 million, respectively, at September 30, 1994. Also includes
$24 million, $24 million, $122 million, $111 million, and $140 million, at
September 30, 1995, June 30, 1995, March 31, 1995, December 31, 1994, and
September 30, 1994, respectively, of the excess of the net book value over
90 percent of the fair value of purchased mortgage servicing rights and
credit card intangibles.
/b/ The leverage ratio is based on period-end total assets rather than average
total assets as this ratio is more indicative of future leverage ratios. The
ratio using Tier 1 capital based on average total assets was 6.96% at
September 30, 1994.
BAC's risk-based capital ratios continued to exceed
regulatory guidelines for "well-capitalized" status. BAC's
total and Tier 1 risk-based capital ratios decreased 23 basis
points and 2 points, respectively, between December 31, 1994
and September 30, 1995. These declines primarily resulted
from an increase in total risk-weighted assets, in
particular, loans and off-balance-sheet credit-related
commitments. BAC's Tier 1 leverage ratio was 6.80 percent at
September 30, 1995, compared with 6.74 percent at December
31, 1994.
43
<PAGE>
OTHER INFORMATION
================================================================================
ITEM 6. (a) Exhibits:
EXHIBITS AND
REPORTS ON Exhibit
FORM 8-K Number Exhibit
------- -------
10.a. BankAmerica Corporation 1992 Management Stock
Plan, as amended*
10.b. BankAmerica Corporation 1987 Management
Stock Plan, as amended*
10.c. BankAmerica Corporation Management Incentive
Stock Plan, as amended*
10.d. Security Pacific Corporation Stock-Based
Incentive Award Plan, as amended*
10.e. Security Pacific Corporation Stock Option Plan,
as amended*
10.f. BankAmerica Corporation Amended and Restated
Deferred Compensation Plan for Directors,
amendment*
27 Financial Data Schedule
-----------------------------------------------------------------
*Management contract or compensatory plan, contract, or
arrangement.
(b) Reports on Form 8-K:
During the third quarter of 1995, the Parent filed a report
on Form 8-K dated July 19, 1995. The July 19, 1995 report
filed, pursuant to Items 5 and 7 of the report, a copy of the
Parent's press release titled "BankAmerica Second Quarter
Earnings." After the third quarter of 1995, the Parent filed
reports on Form 8-K dated October 2, 1995 and October 18,
1995. The October 2, 1995 report filed, pursuant to Items 5
and 7 of the report, a copy of the Parent's press release
titled "BankAmerica Board Increases Preferred Stock
Repurchase Authorization to $750 million From $500 million."
The October 18, 1995 report filed, pursuant to Items 5 and 7
of the report, a copy of the Parent's press release titled
"BankAmerica Third Quarter Earnings."
44
<PAGE>
SIGNATURES
================================================================================
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
BANKAMERICA CORPORATION
Registrant
By Principal Financial Officer and
Duly Authorized Signatory:
/s/ LEWIS W. COLEMAN
--------------------
Lewis W. Coleman
Vice Chairman of the Board and
Chief Financial Officer
November 9, 1995
By Chief Accounting Officer and
Duly Authorized Signatory:
/s/ JAMES H. WILLIAMS
---------------------
James H. Williams
Executive Vice President
and Chief Accounting Officer
November 9, 1995
45
<PAGE>
[BANKAMERICA CORPORATION LOGO APPEARS HERE]
BankAmerica
Other information about BankAmerica Corporation may be found in its Annual
Report to Shareholders. This report, as well as additional copies of this
Analytical Review and Form 10-Q, may be obtained from:
Corporate Public Relations #3124
Bank of America
P.O. Box 37000
San Francisco, CA 94137
[RECYCLED PAPER Recycled
LOGO APPEARS Paper
HERE]
NL-9 11/95
<PAGE>
GRAPHICS APPENDIX INDEX
<TABLE>
<CAPTION>
BankAmerica Corporation
Third Quarter 1995 10-Q
page reference Description of omitted graphic
- ----------------------- ------------------------------
<S> <C>
40 Net Interest Rate Risk
Position
(Plot point graph in non-EDGAR
version)
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Reference Description
- --------- -----------
<S> <C>
10.a. BankAmerica Corporation 1992 Management Stock Plan, as amended*
10.b. BankAmerica Corporation 1987 Management Stock Plan, as amended*
10.c. BankAmerica Corporation Management Incentive Stock Plan, as
amended*
10.d. Security Pacific Corporation Stock-Based Incentive Award Plan, as
amended*
10.e. Security Pacific Corporation Stock Option Plan, as amended*
10.f. BankAmerica Corporation Amended and Restated Deferred
Compensation Plan for Directors, Amendment*
27 Financial Data Schedule
</TABLE>
___________________________________
* Management contract or compensatory plan, contract, or arrangement.
4117956
<PAGE>
EXHIBIT 10.a.
[LOGO OF BANKAMERICA CORPORATION APPEARS HERE]
BANKAMERICA CORPORATION
1992 MANAGEMENT STOCK PLAN
AS ADOPTED MARCH 2, 1992 AND
AMENDED THROUGH AUGUST 7, 1995
<PAGE>
BANKAMERICA CORPORATION
1992 MANAGEMENT STOCK PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
<S> <C>
GENERAL...................................................................... 1
1.1 Background of Plan................................................. 1
1.2 Purpose of the Plan................................................ 1
1.3 Definitions........................................................ 1
1.4 Administration of Plan............................................. 5
1.5 Eligibility to Receive Grants and Awards........................... 6
1.6 Types of Grants and Awards Under Plan.............................. 6
1.7 Limitation on Available Shares..................................... 6
1.8 Effective Date and Term of Plan.................................... 7
1.9 Limitation on Options and SARs Awardable to Any Single
Participant........................................................ 8
ARTICLE II
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS...................... 8
2.1 Grant of Stock Options............................................. 8
2.2 Award Agreements................................................... 8
2.3 Option Price....................................................... 8
2.4 Option Period...................................................... 9
2.5 Limitation on ISOs................................................. 9
2.6 Manner of Paying Option Price...................................... 9
2.7 Exercise of Option................................................. 10
2.8 Cancellation of SARs............................................... 10
2.9 Cancellation and Regrant of Options................................ 10
ARTICLE III
STOCK APPRECIATION RIGHTS.................................................... 10
3.1 Grant of Stock Appreciation Rights................................. 10
3.2 Form and Timing of Payment......................................... 11
3.3 Cancellation of Related Options.................................... 11
ARTICLE IV
RESTRICTED STOCK AND RESTRICTED STOCK UNITS.................................. 12
4.1 Introduction....................................................... 12
4.2 Award of Restricted Stock and Restricted Stock
Units.............................................................. 12
4.3 Minimum Restrictions on Disposition................................ 12
4.4 Optional Restrictions.............................................. 12
4.5 Termination of Employment of Restricted Stockholder
for Gross Misconduct............................................... 13
</TABLE>
i
4015376.04
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.6 Termination of Employment of Restricted Stockholder
not Involving Gross Misconduct..................................... 13
4.7 Registration and Escrow............................................ 14
4.8 Payment in Respect of Restricted Stock Units....................... 14
4.9 Dividends on Restricted Stock...................................... 15
4.10 Voting Rights...................................................... 15
ARTICLE V
OTHER STOCK-BASED AWARDS..................................................... 15
5.1 Other Stock-Based Awards........................................... 15
ARTICLE VI
MISCELLANEOUS................................................................ 15
6.1 Notices............................................................ 15
6.2 Amendments of Plan................................................. 16
6.3 Leaves of Absence.................................................. 16
6.4 Dilution and Other Adjustments..................................... 16
6.5 General Restriction................................................ 17
6.6 Change in Control.................................................. 17
6.7 Withholding Taxes.................................................. 18
6.8 Non-Assignability.................................................. 18
6.9 No Right to Employment............................................. 19
6.10 Rights as Shareholder.............................................. 19
6.11 Entire Plan........................................................ 20
6.12 Governing Law...................................................... 20
6.13 Delegation......................................................... 20
6.14 Foreign Employees.................................................. 20
</TABLE>
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BANKAMERICA CORPORATION
1992 MANAGEMENT STOCK PLAN
ARTICLE I
GENERAL
1.1 Background of Plan. BankAmerica Corporation hereby establishes the
BankAmerica Corporation 1992 Management Stock Plan (the "Plan"). The Plan
provides for the grant of stock options on BankAmerica Corporation Common Stock,
and for the grant of restricted stock, restricted stock units, stock
appreciation rights, and other stock-based awards. The Plan is the successor to
the BankAmerica Corporation 1987 Management Stock Plan.
1.2 Purpose of the Plan. The purpose of the Plan is to provide contingent
financial incentive to key executive officers of BankAmerica Corporation and its
present and future Subsidiaries (as defined below) and other employees whose
participation in the Plan is deemed to be in the best interests of BankAmerica
Corporation. The Plan will offer competitive levels of incentive compensation
related to long-term corporate financial performance to those key officers and
other employees of the Company who, by virtue of their position and efforts,
contribute to or substantially influence the financial success of BankAmerica
Corporation over multiple-year periods. The Plan is also intended as a means of
increasing officer shareholdings, thereby strengthening the commonality of
interest between BankAmerica shareholders and key officers and other employees
in the Company's management, and as an aid in attracting, retaining and
motivating key officers and other employees of outstanding abilities and
specialized skills.
1.3 Definitions. As used in the Plan and the related Award Agreements,
the following terms, when written with initial capital letters, will have the
meanings stated below:
(a) Award means any grant or award of an Option, Restricted Stock,
Restricted Stock Unit, SAR or Other Stock-Based Award under the Plan.
(b) Award Agreement means any written agreement between BankAmerica
and an employee of the Company pursuant to which a grant or award is made
under the Plan. The Committee shall determine the provisions of each Award
Agreement subject to the provisions hereof.
(c) BankAmerica means BankAmerica Corporation, a Delaware
corporation.
(d) Board means Board of Directors of BankAmerica.
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(e) Change in Control means that one of the following events has
occurred:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of BankAmerica (the "Outstanding
BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of BankAmerica entitled to vote
generally in the election of directors (the "Outstanding BankAmerica
Voting Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a
Change of Control: (i) any acquisition directly from BankAmerica (ii)
any acquisition by BankAmerica, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company
or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (iii)
below.
(ii) Individuals who, as of August 7, 1995, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to August 7, 1995 whose election, or nomination
for election by BankAmerica's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board.
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
BankAmerica or any of its subsidiaries (a "Business Combination"), in
each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding BankAmerica Common
Stock and Outstanding BankAmerica Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly,
more than 80% of, respectively, the then
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outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns
BankAmerica or all or substantially all of BankAmerica's assets either
directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding BankAmerica Common Stock and
Outstanding BankAmerica Voting Securities, as the case may be,
(provided, however, that, for the purposes of this clause (A), any
shares of common stock or voting securities of such resulting
corporation received by such beneficial owners in such Business
Combination other than as the result of such beneficial owners'
ownership of Outstanding BankAmerica Common Stock or Outstanding
BankAmerica Voting Securities immediately prior to such Business
Combination shall not be considered to be owned by such beneficial
owners for the purposes of calculating their percentage of ownership
of the outstanding common stock and voting power of the resulting
corporation), (B) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation unless such Person owned 20% or more of the Outstanding
BankAmerica Common Stock or Outstanding BankAmerica Voting Securities
immediately prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(f) Committee means the Executive Personnel and Compensation
Committee of the Board.
(g) Common Stock means shares of BankAmerica's common stock, $1.5625
par value per share.
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(h) Company means BankAmerica and its Subsidiaries, collectively.
(i) The Fair Market Value of a share of Common Stock on any date
means the average of the high and low sales prices of a share of Common
Stock as reflected in the report of consolidated trading of New York Stock
Exchange listed securities for that day (or, if no shares were publicly
traded on that day, the immediately preceding day that shares were so
traded) published in The Wall Street Journal or in any other publication
selected by the Committee; provided, however, that if shares of Common
Stock shall not have been publicly traded for more than ten days
immediately preceding such date, then the fair market value of a share of
Common Stock shall be determined by the Committee in such manner as it may
deem appropriate.
(j) Major Combination means a merger, acquisition or other business
combination in which the number of shares of Common Stock outstanding as of
the close of business on the effective date of the combination is at least
10% greater than the number of shares of Common Stock outstanding prior to
the effective date of the combination.
(k) 1987 Plan means the plan adopted by the Board of Directors of
BankAmerica Corporation on April 6, 1987, as amended, pursuant to which
BankAmerica Corporation has issued non-qualified stock options, incentive
stock options, performance stock options, and restricted stock to key
officers and other employees of BankAmerica and to other individuals whose
participation in the 1987 Plan was deemed to be in the best interests of
BankAmerica.
(l) Option means an option to purchase shares of the Common Stock,
and shall be one of two kinds: (i) Incentive Stock Options ("ISOs") and
(ii) Non-Qualified Stock Option ("NQSOs"). The Company intends the ISOs
shall meet the requirements of Section 422A of the Internal Revenue Code
and the regulations thereunder applicable to incentive stock options, and
that NQSOs shall not meet such requirements.
(m) Optionee means the holder of an Option.
(n) Other Stock-Based Award means an Award granted pursuant to
Section 5.1 of the Plan.
(o) Participant means an officer or employee designated to receive a
grant or award under the Plan.
(p) Restricted Stock means Common Stock issued or delivered pursuant
to Article IV with the restrictions set forth therein.
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(q) Restricted Stock Unit means any right granted pursuant to Article
IV that is denominated in shares of Common Stock.
(r) Retirement means, with respect to grants and awards made on or
after August 2, 1993, the last day of employment with BankAmerica or one of
its subsidiaries prior to the employee's retirement at normal retirement
age under a retirement program of BankAmerica or one of its Subsidiaries;
and, with respect to grants and awards made before August 2, 1993, the last
day of employment with BankAmerica or one of its subsidiaries prior to the
employee's retirement under a retirement program of BankAmerica or one of
its subsidiaries.
(s) Stock Appreciation Right ("SAR") has the meaning set forth in
Section 3.1.
(t) Subsidiary means any corporation of which BankAmerica owns,
directly or indirectly, twenty percent or more of the voting stock.
(u) Window Period means the time period described in Section 3.2
hereof.
1.4 Administration of Plan. (a) The Plan shall be administered by the
Committee. The Committee shall consist of at least three members of the Board,
none of whom shall be, while serving on the Committee, eligible to receive a
grant or award under the Plan or under any other plan of the Company or its
affiliates under which the participants are entitled to acquire Common Stock,
stock options, restricted stock, restricted stock units, and related rights,
stock appreciation rights or other stock-based awards of the Company or any of
its affiliates. Members of the Committee shall serve at the pleasure of the
Board. Notwithstanding the foregoing, all grants and awards under the Plan to
the Chief Executive Officer of BAC shall be approved or ratified by the Board.
(b) Subject to the provisions of the Plan, the Committee shall have
sole, final, and conclusive authority to determine:
(i) the employees to whom Awards shall be made;
(ii) the number of shares of Common Stock to be optioned, granted
or awarded to each such employee;
(iii) whether and to what extent an Optionee may use already-owned
shares of Common Stock to exercise Options;
(iv) the restrictions to be imposed on each share of Restricted
Stock and on Restricted Stock Units awarded
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pursuant to Article IV of this Plan, which shall not be less than the
minimum restrictions set forth therein;
(v) which Options granted shall be Incentive Stock Options, and
which shall be Non-Qualified Stock Options;
(vi) the price to be paid for the shares upon the exercise of
each Option, which shall be not less than 100% of the Fair Market
Value per share, as determined by the Committee, of the Common Stock
at the time of granting the Option;
(vii) the period within which each Option shall be exercised;
(viii) the terms and conditions of each Award Agreement between
BankAmerica and an employee to whom the Committee has made an Award,
which, however, shall be in accordance with the provisions of the
Plan; and
(ix) subject to the provisions of Section 6.13, the Committee
shall have the power, authority, and sole discretion to construe,
interpret and administer the Plan. The Committee's decisions
construing, interpreting and administering the Plan shall be
conclusive and binding on all parties.
1.5 Eligibility to Receive Grants and Awards. Employees of BankAmerica or
of any of its Subsidiaries who shall, in the judgment of the Committee be
qualified by position, training or ability to contribute substantially to the
progress of BankAmerica, shall be eligible to receive grants and awards under
the Plan.
1.6 Types of Grants and Awards Under Plan. Grants and awards under the
Plan may be in the form of any one or more of the following: (i) Incentive Stock
Options, (ii) Non-Qualified Stock Options, (iii) Stock Appreciation Rights, (iv)
Restricted Stock Units, (v) Restricted Stock or (vi) Other Stock-Based Awards.
1.7 Limitation on Available Shares. For each calendar year from and
including 1995 a number of shares of Common Stock in an amount of up to one and
one-half percent (1.5%) of the number of shares of Common Stock outstanding as
reported in the annual report to shareholders of BankAmerica for the preceding
year shall become available for delivery with respect to Awards under the Plan,
provided, however, that as of the effective date of any Major Combination (as
- -------- -------
defined in Section 1.3) the number of shares available for delivery in that year
with respect to Awards under the Plan shall be increased to one and one-half
percent (1.5%) of the number of shares of Common Stock outstanding as of the
close of business on the effective date of that Major Combination. Shares of
Common Stock delivered under the Plan may be original issue
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shares, shares purchased in the open market or otherwise or other treasury
stock.
In addition, (a) any shares of Common Stock which as of the effective date
of the Plan are reserved for delivery under the 1987 Plan and which are not
thereafter delivered, and (b) any shares of Common Stock available for delivery
under the Plan in previous years but not actually delivered, shall be added to
the aggregate number of shares of Common Stock available for delivery in that
calendar year under the Plan; provided, however, that no more than 30 percent
-------- -------
(30%) of the shares of Common Stock available for delivery under the Plan in any
calendar year shall be delivered in respect of Restricted Stock or Restricted
Stock Units. Notwithstanding the foregoing, but subject to adjustment as
provided in Section 6.4, no more than 5,000,000 shares shall be cumulatively
available under the Plan for delivery upon the exercise of ISOs. The Committee
shall have no obligation to grant or award all or any portion of the shares
available for delivery in any year. The Board may, by resolution, limit the
number of shares that may be available for delivery with respect to Awards under
the Plan in any calendar year to a number of shares lower than would otherwise
be available for delivery hereunder.
Shares of Common Stock subject to Awards under the Plan that for any reason
are cancelled or terminated, or expire, shall again be available for delivery
under the Plan.
Shares of Restricted Stock and Restricted Stock Units that for any reason
are reacquired by BankAmerica pursuant hereto shall again be available for
delivery under the Plan; provided, however, that shares of Restricted Stock or
-------- -------
Restricted Stock Units as to which dividends or payments equivalent to dividends
have been paid to or reinvested for the account of the Restricted Stockholder
prior to reacquisition by BankAmerica shall not again be available for delivery
under the Plan after such reacquisition.
Notwithstanding the foregoing, neither (i) shares of Common Stock
transferred or relinquished to the Company upon the exercise of an Option or in
satisfaction of any withholding obligation, nor (ii) shares of Common Stock
subject to an Award denominated in shares of Common Stock but settled by the
payment of cash in accordance with the Plan, shall again be available for
delivery under the Plan.
1.8 Effective Date and Term of Plan. (a) The Plan shall become
effective on March 2, 1992 and the Committee may, in its discretion, make grants
and awards to eligible key officers and other employees of the Company as of
that date, subject, however, to the approval of the Plan by the shareholders of
BankAmerica at the 1992 annual meeting of shareholders. In the event the Plan is
not approved at such meeting, the Plan and all grants and awards
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hereunder shall be void, and the Company shall have no obligation to any
recipients of such grants and awards.
(b) The Committee may make grants and awards under the Plan beginning
March 2, 1992 and during each subsequent year until such time as the Plan may be
terminated by the Board in its sole discretion, or as hereinafter provided.
(c) Unless the shareholders of BankAmerica shall approve an extension
or renewal of the Plan for such new or additional term as they may determine, no
grants and awards shall be made after March 2, 2002. However, all grants and
awards made under the Plan prior to such date shall remain in effect until such
grants and awards shall have been satisfied, terminated, or paid out, or expire,
in accordance with the Plan and the terms of such grants and awards.
1.9 Limitation on Options and SARs Awardable to Any Single Participant.
The maximum number of shares of Common Stock underlying Options and SARs that
may be awarded under the Plan to any single Participant during the period from
March 2, 1992, the effective date of the Plan, through March 2, 2002, is
10,000,000. The minimum price at which each Option is exercisable and the
minimum grant price of each SAR are specified in Sections 2.3 and 3.1,
respectively, of the Plan.
ARTICLE II
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS
2.1 Grant of Stock Options. The Committee may, from time to time and
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, grant to any eligible employee Incentive Stock Options
("ISOs" or "Options") and/or Non-Qualified Stock Options ("NQSOs" or "Options")
(as these terms are defined in Section 1.3) to purchase, for cash and/or for
already-owned shares of Common Stock, such number of shares of Common Stock as
the Committee shall determine.
2.2 Award Agreements. The grant of an ISO or NQSO shall be evidenced by a
written Award Agreement in such form as the Committee may from time to time
determine in accordance with the provisions of the Plan, executed by
BankAmerica. Each Award Agreement pursuant to which Options are granted shall
state the number of shares of Common Stock subject to the Option, the Option
price, the Option Period, and any limitations on the Option, the restrictions on
assigning and transferring the Option described in Section 6.8, the manner of
payment for shares of Common Stock, and such other terms as the Committee shall
determine.
2.3 Option Price. The purchase price per share of Common Stock which the
Optionee must deliver upon the exercise of an ISO
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or NQSO shall be fixed by the Committee, but shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted.
2.4 Option Period. (a) Each Option granted as an ISO or NQSO shall
become exercisable in part or in full at such time or times as the Committee may
determine and specify in each Award Agreement; provided, however, that no Option
-------- -------
will be exercisable before the date six months after the date the Option was
granted and no ISO shall be exercisable after the expiration of 10 years from
the date the ISO was granted.
(b) Each Award Agreement shall set forth the extent to which the
Optionee shall have the right to exercise the Option following the Optionee's
retirement, death or termination of the Optionee's employment with the Company
(including termination that, pursuant to the Award Agreement, may be deemed to
occur upon a change in ownership of the Optionee's employer such that the
Optionee's employer ceases to be BankAmerica or one of its Subsidiaries). Such
provisions shall be determined in the sole discretion of the Committee and need
not be uniform among all Options issued pursuant to the Plan.
(c) The Committee may determine in its sole discretion from time to
time to permit the Optionee to purchase all shares of Common Stock covered by
the Optionee's Options, upon or after the Optionee's death, retirement, or
termination of employment with the Company (including termination that, in the
sole discretion of the Committee, may be deemed to occur upon a change in
ownership of the Optionee's employer such that the Optionee's employer ceases to
be BankAmerica or one of its Subsidiaries), without regard to whether the
Options were fully exercisable upon death, retirement or termination of
employment under the terms of the Award Agreements with respect to such Options.
2.5 Limitation on ISOs. Notwithstanding any other provisions in the Plan
or in any ISO agreement, to the extent the aggregate Fair Market Value
(determined at the time the option is granted) of stock with respect to which
ISOs granted after December 31, 1986 are exercisable for the first time by an
Optionee during any calendar year under all plans of BankAmerica and its
subsidiaries exceeds $100,000, such options shall be treated as NQSOs. This rule
shall be applied by taking options into account in the order in which they were
granted so that options with the earliest grant date will receive ISO treatment.
No ISO shall be granted to any person who at the time owns more than ten
percent of total combined voting power of all classes of stock of BankAmerica or
of any Subsidiaries.
2.6 Manner of Paying Option Price. On exercise of each ISO or NQSO, the
Option Price shall be paid as follows: (a) in cash,
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(b) in already-owned shares of Common Stock, or (c) in some combination of cash
and shares, as specified in the Award Agreement or as otherwise permitted by the
Committee. Already-owned shares of Common Stock must have been owned by the
Optionee at the time of exercise for at least the period of time specified in
the Award Agreement, and shall be valued at their Fair Market Value on the date
of exercise.
2.7 Exercise of Option. The Committee shall establish, and shall set
forth in each Award Agreement, the procedures governing the exercise of an ISO
or NQSO. In general, subject to such specific provisions, an ISO or NQSO shall
be exercised as follows:
(a) the Optionee shall deliver written notice that he or she intends
to exercise the Option to the Company department or officer designated in
the Award Agreement;
(b) the Optionee shall pay the full Option Price at the time of
exercise, according to Section 2.6 above; and
(c) as soon as practicable after receipt of such notice and payment,
the Company shall direct BankAmerica's transfer agent to register the
shares of Common Stock in the name of the Optionee.
2.8 Cancellation of SARs. Each Award Agreement shall specify whether the
exercise of an ISO or NQSO with respect to a share of Common Stock shall cancel
any SAR related to such share.
2.9 Cancellation and Regrant of Options. The Committee may cancel
particular NQSOs and regrant to the same Optionee NQSOs to purchase the same or
a different number of shares of Common Stock, only (i) with the consent of the
Optionee, and (ii) if the Option Price for the NQSOs so regranted is no less
than the higher of (A) the Option Price for the NQSOs so cancelled, or (B) the
Fair Market Value of the Common Stock on the date of regrant.
ARTICLE III
STOCK APPRECIATION RIGHTS
3.1 Grant of Stock Appreciation Rights. The Committee is hereby
authorized to grant Stock Appreciation Rights ("SARs") to Participants. The
terms and conditions of the SARs shall be as provided in the Award Agreement
with respect to such SARs. Each Award Agreement shall specify the grant price,
term, methods of exercise, methods of settlement, disposition of the SARs on
retirement, death or termination of employment of the holder of the SARs, and
such other terms and conditions of the SARs as shall be determined by the
Committee. The Committee may impose such conditions or restrictions on the
exercise of any SAR as it may deem appropriate. SARs may be granted either alone
or in tandem
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with grants of Options under the Plan. SARs granted in tandem with Options are
referred to herein as "Tandem SARs".
The Committee shall not grant an SAR in tandem with an ISO unless, pursuant
to applicable law and rules and regulations of the Internal Revenue Service, the
SAR may be attached to the ISO without causing the ISO to fail to meet the
requirements of Section 422A of the Internal Revenue Code.
Subject to the terms of the Plan and the applicable Award Agreement, an SAR
shall confer on the holder thereof a right to receive payment (the "SAR Value"),
upon exercise thereof, equal to the excess of (i) the Fair Market Value of one
share of Common Stock on the date of exercise over (ii) the grant price of the
SAR as specified by the Committee, which shall be not less than the Fair Market
Value of one share of Common Stock on the date of grant of the SAR.
3.2 Form and Timing of Payment. (a) Exercise of Tandem SARs for Cash or
Common Stock. Tandem SARs exercised during the Window Period described below
shall be payable only in cash, and Tandem SARs exercised outside the Window
Period shall be payable only in shares of Common Stock. A "Window Period" is a
period (i) beginning on the third business day following the date of public
release of BankAmerica's quarterly or annual summary statements of revenues and
earnings and (ii) ending on the twelfth business day following such date.
(b) Amount of Cash Payable on Exercise of Tandem SARs. When Tandem
SARs are exercised during the Window Period, the Optionee shall receive a cash
amount equal to (i) the number of Tandem SARs exercised multiplied by (ii) the
difference between (A) the highest Fair Market Value of one share of Common
Stock as of any day during the Window Period, and (B) the Option Price specified
for the related Option.
(c) Number of Shares Issuable or Deliverable on Exercise of Tandem
SARs. When Tandem SARs are exercised outside the Window Period, the Optionee
shall receive the number of whole shares of Common Stock equal to (i) the
aggregate SAR Value (as defined in Section 3.1) of the Tandem SARs exercised
divided by (ii) the Fair Market Value (as defined in Section 1.3) on the date of
exercise. The Company shall deliver cash in lieu of fractional shares.
3.3 Cancellation of Related Options. Each Award Agreement shall specify
whether the exercise of an SAR shall cancel any NQSO to which it relates, to the
extent of the exercise. Any exercise of an SAR with respect to an ISO must be
made in accordance with Section 3.1.
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ARTICLE IV
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
4.1 Introduction. BankAmerica has outstanding shares of restricted stock
granted under the 1987 Plan, the BankAmerica Corporation Restricted Stock Bonus
Plan (the "Bonus Plan") and the BankAmerica Corporation Management Incentive
Stock Plan ("MISP"). Restricted stock already granted under the 1987 Plan, the
Bonus Plan and the MISP will continue to be held under the terms of those plans,
except as provided in Section 1.7 of this Plan. Only grants of Restricted Stock
and Restricted Stock Units made on or after the effective date of this new Plan
shall be governed by the terms of this Article IV.
4.2 Award of Restricted Stock and Restricted Stock Units. The Committee
may, from time to time and subject to the provisions of the Plan and such other
terms and conditions as the Committee may prescribe, award shares of Common
Stock or Restricted Stock Units to be held under the restrictions set forth in
this Article to any eligible employee (the "Restricted Stockholder"). If an
eligible employee has been employed less than six months, any award of
Restricted Stock shall only be made from Common Stock which is held as treasury
stock by BankAmerica.
4.3 Minimum Restrictions on Disposition. A Restricted Stockholder may
not, under any circumstances, voluntarily dispose of any of the Restricted Stock
or Restricted Stock Units prior to the first to occur of the following events:
(a) the date on which the Restricted Stockholder completes the period
of continuous service, which shall not be less than one year, with the
Company following the award date specified by the Committee for such award;
(b) delivery of the Restricted Stock to the Restricted Stockholder
following a Committee determination pursuant to Section 6.6 hereof in
connection with a Change in Control;
(c) the Restricted Stockholder's retirement or death; or
(d) delivery of the Restricted Stock to the Restricted Stockholder
following his or her termination of employment prior to retirement or death
pursuant to a determination by the Committee under Section 4.6.
The limitations in this Section 4.3 will hereinafter be referred to as the
"minimum restrictions."
4.4 Optional Restrictions. In addition to the minimum restrictions, the
Committee may impose additional restrictions
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("optional restrictions") upon the Restricted Stockholder's voluntary
disposition of the Restricted Stock or Restricted Stock Units, either at the
time the Committee makes an award of such Restricted Stock or Restricted Stock
Units or at any subsequent time before the minimum restrictions expire. The
Committee may impose optional restrictions (such as, without limitation,
permitting such disposition and release only in installments over a period of
years) as it may deem in the best interests of the Restricted Stockholder, or in
the case of the Restricted Stockholder's death, of the heirs or legatees who
become entitled to such Restricted Stock or Restricted Stock Units by the
applicable laws of inheritance or under the terms of the Restricted
Stockholder's will.
4.5 Termination of Employment of Restricted Stockholder for Gross
Misconduct. If a Restricted Stockholder's services are terminated for cause for
gross misconduct, all shares of Restricted Stock and Restricted Stock Units
awarded to any Restricted Stockholder under this Plan shall be forfeited, and
the Committee shall direct such shares of Restricted Stock and Restricted Stock
Units to be transferred and delivered to BankAmerica. Gross misconduct
includes, but is not limited to, acts of dishonesty, such as theft,
embezzlement, and falsification of the Company's records with intent to deceive;
breach of trust; knowing violation of rules established by the Company; and any
crime determined by the Company to result in termination of employment.
4.6 Termination of Employment of Restricted Stockholder not Involving
Gross Misconduct.
(a) Should a Restricted Stockholder who was employed by the Company
at the date of grant terminate his or her employment with the Company prior to
(i) the date on which he or she completes the period of continuous service for
the Company following the award date specified by the Committee for such award,
or (ii) his or her death or retirement, or
(b) should the Company terminate his or her employment for any reason
other than for a cause set forth in Section 4.5 above,
BankAmerica shall reacquire all the Restricted Stock and Restricted Stock Units
without the payment of consideration in any form to such Restricted Stockholder
and the Restricted Stockholder shall unconditionally forfeit any right, title or
interest to such Restricted Stock and Restricted Stock Units, unless the
Committee, up to 90 days after such termination, determines in its sole
discretion to permit the Restricted Stockholder to (i) retain all or any part of
the Restricted Stock, and/or (ii) to waive in whole or in part any or all
remaining restrictions on Restricted Stock Units, and to deliver shares of
Common Stock to the Restricted Stockholder in respect of such Restricted Stock
Units. Upon
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direction of the Committee, all forfeited Restricted Stock and Restricted Stock
Units shall be transferred and delivered to BankAmerica. Termination of a
Restricted Stockholder's employment with the Company shall be deemed to include
a change in ownership of the Restricted Stockholder's employer such that the
Restricted Stockholder's employer ceases to be BankAmerica or one of its
Subsidiaries.
4.7 Registration and Escrow. Any Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event that any stock certificate is issued
in respect of shares of Restricted Stock granted under the Plan, such
certificate shall be registered in the name of the Restricted Stockholder and
shall either bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Restricted Stock, or, at the direction of the
Committee, be held by Bank of America National Trust and Savings Association
(the "Bank") (or another escrow agent appointed by the Committee) in escrow
subject to delivery to the Restricted Stockholder or to BankAmerica at such
times and in such amounts as the Committee shall direct under the terms of the
Plan. When an employee accepts an award of Restricted Stock pursuant to the
Plan, he or she thereby grants an irrevocable power of attorney to the Bank or
any other escrow agent appointed by the Committee to cause the transfer and
delivery to BankAmerica of any such Restricted Stock which the Committee shall
direct to be so transferred and delivered pursuant hereto.
4.8 Payment in Respect of Restricted Stock Units.
(a) Each Restricted Stock Unit shall represent one share of Common
Stock, and shall, at the time and to the extent it becomes vested, be payable by
the delivery of one share of Common Stock. The Committee is authorized to grant
Restricted Stock Units under which the Restricted Stockholder shall be entitled
to receive payments equivalent to dividends with respect to a number of shares
of Common Stock determined by the Committee, and the Committee may determine
that such amounts (if any) shall be paid to the Restricted Stockholder in cash
from time to time, or be deemed to have been reinvested in additional shares of
Common Stock or additional Restricted Stock Units, or otherwise reinvested.
Restricted Stock Units shall have no voting rights.
(b) The Committee may, in its discretion, provide that payment to the
Restricted Stockholder in respect of Restricted Stock Units shall be deferred
until such date or dates, not later than the Restricted Stockholder's death,
retirement or other termination of employment with the Company, as the
Restricted Stockholder may elect. Any such election shall be filed in writing
with the Committee in accordance with such rules and regulations,
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<PAGE>
including any time periods within which such election shall be made, as the
Committee may specify.
4.9 Dividends on Restricted Stock. Even while the Restricted Stock is
held in escrow, the Committee may determine that all dividends BankAmerica pays
on the Restricted Stock shall be delivered directly to the Restricted
Stockholder, not the escrow account.
4.10 Voting Rights. Even while the Restricted Stock is held in escrow,
the Committee may determine that the Restricted Stockholder shall have the same
voting rights with respect to the Restricted Stock as those provided to other
shareholders of Common Stock.
ARTICLE V
OTHER STOCK-BASED AWARDS
5.1 Other Stock-Based Awards. The Committee is hereby authorized to grant
to Participants such awards that are denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to, shares of
Common Stock (including, without limitation, securities convertible into shares
of Common Stock) as are deemed by the Committee to be consistent with the
purposes of the Plan; provided, however, that such grants must comply with Rule
-------- -------
16b-3 promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and applicable law, except that Options may be
transferable to the extent permitted by, and in accordance with the provisions
of, Section 6.8 of the Plan. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the terms and
conditions of such awards. Shares of Common Stock or other securities delivered
pursuant to a purchase right granted under this Section 5.1 shall be purchased
for such consideration, which may be paid by such method or methods and in such
form or forms, including, without limitation, cash, shares of Common Stock,
other securities, other awards, or other property, or any combination thereof,
as the Committee shall determine, the value of which consideration, as
established by the Committee, shall not be less than the Fair Market Value of
such shares of Common Stock or other securities as of the date such purchase
right is granted.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or messenger, addressed
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(a) if to the Company, at
BankAmerica Corporation
1 South Van Ness Avenue, 7th Floor
San Francisco, CA 94103
Attn: c/o Bank of America NT&SA
Executive Resources #3005
(b) if to the Participant, at the last address shown on the Company's
personnel records, or
(c) to such address as either the Company or the Participant shall
later designate by notice to the other.
6.2 Amendments of Plan. BankAmerica may, at any time and from time to
time, modify, amend, suspend or terminate the Plan in any respect by action of
the Board or by written amendment executed by a duly authorized officer of
BankAmerica. Notwithstanding the above, however, any modification, amendment,
suspension or termination of the Plan shall not affect a Participant's rights to
a grant or award previously made, except as provided in Section 1.8(a), or
except with his or her consent.
6.3 Leaves of Absence. The Committee shall be entitled to make such
rules, regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence from the Company taken by the recipient of any
grant or award under the Plan. Without limiting the generality of the foregoing,
the Committee shall be entitled to determine (a) whether or not any such leave
of absence shall be treated as a termination of employment with the Company
within the meaning of the Plan and (b) the impact, if any, of any such leave of
absence on grants and awards under the Plan.
6.4 Dilution and Other Adjustments. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
shares of Common Stock, other securities, or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation, split-
up, spin-off, combination, repurchase, or exchange of shares of Common Stock or
other securities of BankAmerica, issuance of warrants or other rights to
purchase shares of Common Stock or other securities of BankAmerica, or other
similar corporate transaction or event, affects the Common Stock, such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
shall deem equitable, adjust any or all of (i) the number and type of shares of
Common Stock which thereafter may be made the subject of Awards, (ii) the number
and type of shares of Common Stock (or other
16
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securities or property) subject to outstanding Awards, and (iii) the grant,
purchase or exercise price with respect to any Award, or, if deemed appropriate,
make provision for a cash payment to the holder of an outstanding Award;
provided, however, in each case, that with respect to Awards of ISOs no such
- -------- -------
adjustment shall be authorized to the extent that such authority would cause the
Plan to violate Section 422A of the Internal Revenue Code or any successor
provision thereto; and provided further that the number of shares of Common
-------- -------
Stock subject to any Award denominated in shares of Common Stock shall always be
a whole number.
6.5 General Restriction. Each grant and award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or federal law, (b) the consent or approval of any government regulatory body,
or (c) an agreement by the recipient of a grant or award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a condition
of, or in connection with, the making of a grant or award or the issue, delivery
or purchase of shares of Common Stock thereunder, then such grant or award shall
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
6.6 Change in Control. If BankAmerica undergoes a Change in Control (as
defined in Section 1.3(e)), the following shall apply:
(a) Except as provided in subsection (b) below, (i) all outstanding
Options and SARs shall be immediately exercisable in full and (ii) all
Restricted Stock, Restricted Stock Units, and Other Stock-Based Awards
shall be immediately released free from all restrictions and shall be
delivered or paid, as the case may be, to the Participant as soon as
practicable following the Change in Control.
(b)(i) The Performance Share Units awarded on November 7, 1994 (and
any subsequent awards of Performance Share Units) under the BankAmerica
Corporation 1992 MSP Performance Share Program shall vest in the time or
times specified in Section 4.1 of the Performance Share Program whether or
not the Participant continues in employment with the Company. However,
following a Change in Control, the Committee shall no longer have
discretion to not vest Performance Share Units after the end of the term of
the Award if BAC ranks 1 or 2 in total shareholder return relative to its
peer banks for the term of the Award.
(b)(ii) In the event (i) any Award has been made to a person who, at
the time of a Change in Control is an officer
17
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or director of BankAmerica, as such terms are defined in Section 16 of the
Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder, and (ii) such Award has not satisfied the
applicable minimum vesting provisions of the Plan, this Section 6.6 shall
apply to such Award immediately after the satisfaction of any such
applicable minimum vesting period, whether or not the person remains an
employee of the Company at that time.
(c) Except as provided in the following sentence (and, if applicable,
the expiration of the minimum vesting period in (b)), in the event a
Participant terminates employment with the Company following a Change in
Control, his or her Options and SARs shall remain exercisable for a period
of three years following termination of employment, not to exceed the
original term of the Option or SAR. The preceding sentence shall not apply
to an incentive stock option unless the option agreement gives the
Committee discretion to permit the incentive stock option to remain
exercisable following termination of the optionholder's employment, in
which case the incentive stock option shall be exercisable for three months
following termination of employment without further Committee action.
(d) Section 6.7 of the Plan regarding payment of withholding taxes
shall remain applicable.
6.7 Withholding Taxes. The Company shall have the right to deduct from
any settlement of an Award made under the Plan, including the delivery or
vesting of shares, an amount sufficient to cover withholding required by law for
any federal, state or local taxes or to take such other action as may be
necessary to satisfy any such withholding obligations. The Committee may permit
shares to be used to satisfy required tax withholding and such shares shall be
valued at the Fair Market Value as of the settlement date of the applicable
award.
6.8 Non-Assignability. Except as provided below, no Participant shall
have the right to alienate, assign, encumber, hypothecate or pledge his or her
interest in any Award under the Plan, voluntarily or involuntarily, and any
attempt to so dispose of any such interest prior to payment thereof shall be
void.
Any Participant who is an Executive Officer (as defined below) shall have
the right, subject to the conditions specified in the following paragraph, to
irrevocably transfer to Immediate Family Members (as defined below) Options
granted at any time under the Plan to any such Participant ("Executive Officer
Participant"). As used in the Plan and the related Award Agreements, the
following terms, when written with initial capital letters, shall have the
meanings stated below:
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(a) The term Executive Officer means an Executive Officer designated
by the Board for federal securities law purposes, provided such officer is
also a member of the Managing Committee of Bank of America NT&SA.
(b) The term Immediate Family Members means (i) the children,
grandchildren or spouse of an Executive Officer Participant or (ii) a trust
for the benefit of such family members.
As conditions to such transferability of any Options, (i) the Executive
Officer Participant may not receive any consideration for the transfer; (ii) the
Award Agreements pursuant to which such Options are granted, or amendments to
the Award Agreements with respect to previously granted Options, in each case
approved by the Committee, must specify the actual extent to which such Options
may be transferred, all in accordance with the terms of the Plan; and (iii) the
Options so transferred must continue to be subject to the same terms and
conditions that were applicable to such Options prior to their transfer.
The transferee of any Options transferred in accordance with the terms and
conditions of the Plan shall have the right to exercise such Options and to have
the shares of Common Stock covered by such Options registered in the name of
such transferee, as though such transferee were the Optionee for purposes of
Section 2.7 of the Plan.
Notwithstanding anything contained in this Section 6.8, the Company shall
have the right to offset from any unpaid or deferred Award any amounts due and
owing from the Participant to the extent permitted by law; provided, however,
-------- -------
that with respect to any Options that are transferred in accordance with the
terms and conditions of the Plan, such right shall cease upon the transfer.
6.9 No Right to Employment. Nothing in the Plan nor in any agreement
entered into pursuant to the Plan shall confer upon any Participant the right to
continue in the employment of the Company, nor affect any right which the
Company may have to terminate the employment of such person.
6.10 Rights as Shareholder. No Participant shall have rights as a
shareholder with respect to shares of Common Stock awarded to him or her unless
and until the certificates for such shares are delivered to him or her. The
Committee may determine that Restricted Stockholders have full voting rights
with respect to Restricted Stock, as provided in Section 4.9 hereof.
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<PAGE>
6.11 Entire Plan. This document is a complete statement of the Plan. As of
its effective date this document supersedes all prior plans, representations and
proposals, written or oral, relating to its subject matter, except as otherwise
provided in Section 1.7 hereof. The Company shall not be bound by or liable to
any person for any representation, promise or inducement made by any employee or
agent of it which is not embodied in this document.
6.12 Governing Law. The Plan shall be construed and enforced in accordance
with California law.
6.13 Delegation. The Committee may delegate to one or more officers of the
Company or any of its Subsidiaries, or to a committee of such officers, the
authority, subject to such terms and limitations as the Committee shall
determine, to make grants and awards to, or to cancel, modify, waive rights with
respect to, alter, discontinue, suspend, or terminate grants or awards held by,
officers or employees of the Company, who are not officers or directors of the
Company for purposes of Section 16 of the Securities Exchange Act of 1934, as
amended.
6.14 Foreign Employees. In order to facilitate the making of any grant or
award under the Plan, the Committee may provide for such special terms for
grants and awards to participants who are foreign nationals or who are employed
by the Company or any Subsidiary outside of the United States of America as the
Committee may consider necessary or appropriate to accommodate differences in
local law, policy or custom. Moreover, the Committee may approve such
supplements to or amendments, restatements, or alternative versions of the Plan
including supplements, amendments or alternative versions providing for Other
Stock-Based Awards as it may consider necessary or appropriate for such
purposes, without thereby affecting the terms of the Plan as in effect for any
other purpose. No such special terms, supplements, amendments or restatements,
however, shall include any provisions that are inconsistent with the terms of
the Plan as then in effect unless the Plan could have been amended to eliminate
such inconsistency without further approval by the shareholders of BankAmerica.
The resolution amending Sections 1.3(e) and 6.6 provided that no
modification, suspension, amendment or termination of the Plan may be made which
would adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option, stock appreciation right, restricted
stock unit or other stock based award granted under the Plan prior to the date
of such modification, suspension, amendment or termination.
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<PAGE>
EXHIBIT 10.b.
[LOGO OF BANKAMERICA CORPORATION APPEARS HERE]
BANKAMERICA CORPORATION
1987 MANAGEMENT STOCK PLAN
As adopted April 6, 1987
and amended
May 25, 1989,
March 5, 1990
October 7, 1991
and August 7, 1995
4116508
<PAGE>
BANKAMERICA CORPORATION
1987 MANAGEMENT STOCK PLAN
TABLE OF CONTENTS Page
----
ARTICLE I
<TABLE>
<CAPTION>
<S> <C>
GENERAL..................................................................... 1
1.1 Background of Plan................................................ 1
1.2 Purpose of Plan................................................... 1
1.3 Definitions....................................................... 1
1.4 Administration of Plan............................................ 4
1.5 Eligibility to Receive Grants and Awards.......................... 5
1.6 Types of Grants and Awards Under Plan............................. 6
1.7 Limitation on Available Shares.................................... 6
1.8 Effective Date and Term of Plan................................... 6
</TABLE>
ARTICLE II
<TABLE>
<CAPTION>
<S> <C>
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS.............................. 7
2.1 Grant of Stock Options..................................................... 7
2.2 Stock Option Agreements.................................................... 7
2.3 Option Price............................................................... 7
2.4 Option Period.............................................................. 7
2.5 Limitation on ISOs......................................................... 8
2.6 Manner of Paying Option Price.............................................. 8
2.7 Exercise of Option......................................................... 8
2.8 Cancellation of SARs....................................................... 9
2.9 Cancellation and Regrant of Non-Qualified Stock Options.................... 9
2.10 Retirement of Optionee at Age Sixty-Five or Later......................... 9
2.11 Early Retirement of Optionee.............................................. 9
2.12 Termination on Leave of Absence or Extraordinary Circumstances............ 10
2.13 Termination of Employment of Optionee..................................... 10
2.14 Death of Optionee......................................................... 11
</TABLE>
ARTICLE III
<TABLE>
<CAPTION>
<S> <C>
PERFORMANCE STOCK OPTIONS............................................................ 11
3.1 Grant of Performance Stock Options......................................... 11
3.2 Stock Option Agreements.................................................... 12
3.3 Option Price............................................................... 12
3.4 Option Period.............................................................. 12
3.5 Dividend Equivalent Credit................................................. 12
3.6 Granting of Dividend Equivalent Credits.................................... 13
</TABLE>
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<TABLE>
<S> <C>
3.7 Manner of Paying Option Price.............................................. 13
3.8 Exercise of Options........................................................ 13
3.9 Surrender of Performance Stock Options..................................... 14
3.10 Payments from the DEC Account............................................. 14
3.11 Cancellation of SARs...................................................... 15
3.12 Cancellation and Regrant of Performance Stock Options..................... 15
3.13 Retirement of Optionee at Age Sixty-Five or Later......................... 15
3.14 Early Retirement of Optionee.............................................. 15
3.15 Termination on Leave of Absence or Extraordinary Circumstances............ 16
3.16 Termination of Employment of Optionee..................................... 16
3.17 Death of Optionee......................................................... 16
</TABLE>
ARTICLE IV
<TABLE>
<CAPTION>
<S> <C>
STOCK APPRECIATION RIGHTS............................................................ 17
4.1 Grant of Stock Appreciation Rights......................................... 17
4.2 Agreements Evidencing SARs................................................. 17
4.3 Exercise of SARs........................................................... 17
4.4 Amount of Payment.......................................................... 17
4.5 Form and Timing of Payment................................................. 18
4.6 Cancellation of Related Options............................................ 18
4.7 Termination of Employment of Optionee...................................... 18
4.8 Death of Optionee.......................................................... 18
</TABLE>
ARTICLE V
<TABLE>
<CAPTION>
<S> <C>
RESTRICTED STOCK..................................................................... 19
5.1 Introduction............................................................... 19
5.2 Award of Restricted Stock.................................................. 19
5.3 Minimum Restrictions on Disposition of Stock Awards........................ 19
5.4 Optional Restrictions...................................................... 20
5.5 Termination of Employment of Restricted Stockholder for Gross
Misconduct............................................................... 20
5.6 Termination of Employment of Restricted Stockholder not
Involving Gross Misconduct............................................... 20
5.7 Escrow..................................................................... 21
5.8 Dividends on Restricted Stock.............................................. 21
5.9 Voting Rights.............................................................. 21
</TABLE>
ARTICLE VI
<TABLE>
<CAPTION>
<S> <C>
MISCELLANEOUS........................................................................ 21
6.1 Notices.................................................................... 21
6.2 Amendments of Plan......................................................... 22
6.3 Leaves of Absence.......................................................... 22
</TABLE>
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<TABLE>
<S> <C>
6.4 Dilution and Other Adjustments............................................. 22
6.5 General Restriction........................................................ 22
6.6 Change in Control.......................................................... 22
6.7 Withholding Taxes.......................................................... 23
6.8 Non-Assignability.......................................................... 23
6.9 No Right to Employment..................................................... 24
6.10 Rights as Shareholder..................................................... 24
6.11 Entire Plan............................................................... 24
6.12 Governing Law............................................................. 24
</TABLE>
iii
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BANKAMERICA CORPORATION
1987 MANAGEMENT STOCK PLAN
ARTICLE I
General
1.1 Background of Plan. BankAmerica Corporation hereby establishes the
BankAmerica Corporation 1987 Management Stock Plan (the "Plan"). The Plan
provides for the grant of three types of stock options on BankAmerica
Corporation Common Stock, and for the grant of restricted stock. The Plan is
the successor to the BankAmerica Corporation Management Incentive Stock Plan.
1.2 Purpose of Plan. The purpose of the Plan is to provide contingent
financial incentive to key executive officers of BankAmerica Corporation and its
present and future Subsidiaries (as defined in Section 1.3(m)) and other
individuals whose participation in the Plan is deemed to be in the best
interests of BankAmerica Corporation. The Plan will offer competitive levels of
incentive compensation related to long-term corporate financial performance to
those key officers and other employees of the Company and other individuals who,
by virtue of their position and efforts, contribute to or substantially
influence the financial success of BankAmerica Corporation over multiple-year
periods. The Plan is also intended as a means of increasing officer
shareholdings, thereby strengthening the commonality of interest between
BankAmerica shareholders and key officers and other employees in the Company's
management, and as an aid in attracting, retaining and motivating key officers
and other employees of outstanding abilities and specialized skills.
1.3 Definitions. As used in the Plan and the related Stock Option
Agreements, the following terms, when written with initial capital letters, will
have the meanings stated below:
(a) BankAmerica means BankAmerica Corporation, a Delaware
corporation.
(b) Board means Board of Directors of BankAmerica.
(c) Change in Control means that one of the following events has
occurred:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of BankAmerica (the "Outstanding
BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of
1
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BankAmerica entitled to vote generally in the election of directors
(the "Outstanding BankAmerica Voting Securities"); provided, however,
that for purposes of this subsection (a), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition directly
from BankAmerica (ii) any acquisition by BankAmerica, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A),
(B) and (C) of subsection (iii) below.
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by BankAmerica's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board.
(iii) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets
of BankAmerica or any of its subsidiaries (a "Business Combination"),
in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding BankAmerica Common
Stock and Outstanding BankAmerica Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly,
more than 80% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns BankAmerica or all or substantially
all of BankAmerica's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding BankAmerica Common Stock and Outstanding BankAmerica
Voting Securities, as the case may be, (provided, however, that, for
the purposes of this clause (A), any shares of common stock or voting
securities of such resulting corporation received by such beneficial
owners in such Business Combination other than as the result of such
beneficial owners' ownership of Outstanding BankAmerica Common Stock
or Outstanding BankAmerica Voting Securities immediately prior to such
Business Combination shall not be considered to be owned by such
beneficial owners for the purposes of calculating their percentage of
ownership of the
2
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outstanding common stock and voting power of the resulting
corporation), (B) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation unless such Person owned 20% or more of the Outstanding
BankAmerica Common Stock or Outstanding BankAmerica Voting Securities
immediately prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(d) Committee means the Executive Personnel and Compensation
Committee of the Board.
(e) Common Stock means shares of BankAmerica's common stock, $1.5625
par value per share.
(f) Company means BankAmerica and its Subsidiaries, collectively.
(g) Dividend Equivalent Credit ("DEC") and Dividend Equivalent Credit
Account ("DEC Account") have the meanings set forth in Section 3.5.
(h) The Fair Market Value of a share of Common Stock on any date
means the average of the high and low sales prices of a share of Common
Stock as reflected in the report of consolidated trading of New York Stock
Exchange listed securities for that day (or, if no shares were publicly
traded on that day, the immediately preceding day that shares were so
traded) published in The Wall Street Journal or in any other publication
selected by the Committee; provided, however, that if shares of Common
Stock shall not have been publicly traded for more than ten days
immediately preceding such date, then the fair market value of a share of
Common Stock shall be determined by the Committee in such manner as it may
deem appropriate.
(i) Management Incentive Stock Plan ("MISP") means the plan adopted
by the Board of Directors of BankAmerica Corporation on December 6, 1982,
as amended, pursuant to which BankAmerica Corporation has issued non-
qualified stock options, incentive stock options, performance stock
options, and restricted stock to key officers and other employees of
BankAmerica.
3
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(j) Option means an option to purchase shares of the Common Stock,
and shall be one of three kinds: (i) Incentive Stock Options ("ISOs") and
(ii) Non-Qualified Stock Option ("NQSOs"), granted pursuant to Article II;
and (iii) Performance Stock Options ("PSOs") granted pursuant to Article
III. The Company intends the ISOs shall meet the requirements of Section
422A of the Internal Revenue Code and the regulations thereunder applicable
to incentive stock options, and that NQSOs and PSOs shall not meet such
requirements.
(k) Optionee means the holder of an Option.
(l) Restricted Stock means Common Stock issued or delivered pursuant
to Article V with the restrictions set forth in Sections 5.3 and 5.4.
(m) Retirement (including Early Retirement) means the last day of
employment with the BankAmerica or one of its Subsidiaries prior to the
employee's retirement under a retirement program of BankAmerica or one of
its Subsidiaries.
(n) Stock Appreciation Right ("SAR") has the meaning set forth in
Section 4.1.
(o) Stock Option Agreement means any written agreement between
BankAmerica and an employee of the Company or other individual pursuant to
which an Option is granted. The Committee shall determine the terms of each
Stock Option Agreement subject to the provisions of Section 2.2 with
respect to ISOs and NQSOs, and to the provisions of Section 3.2 with
respect to PSOs.
(p) Subsidiary means any corporation of which BankAmerica owns,
directly or indirectly, twenty percent or more of the voting stock.
(q) Window Period means the time period described in Section 4.5(a)
hereof.
(r) Section 16 means Section 16 of the Securities Exchange Act of
1934 and the rules thereunder.
1.4 Administration of Plan. (a) The Plan shall be administered by the
Committee. The Committee shall consist of at least three members of the Board,
none of whom shall be, while serving on the Committee, eligible to receive a
grant or award under the Plan or under any other plan of the Company or its
affiliates under which the participants are entitled to acquire Common Stock,
stock options, restricted stock, and related rights, or stock appreciation
rights of the Company or any of its affiliates. Members of the Committee shall
serve at the pleasure of the Board.
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(b) Subject to the provisions of the Plan, the Committee shall
have sole, final, and conclusive authority to determine:
(i) the employees and other individuals to whom
Options, Restricted Stock, and related rights, shall be granted or awarded;
(ii) the number of shares of Common Stock to be
optioned, granted or awarded to each such employee or other individual;
(iii) whether and to what extent an Optionee may use
already-owned shares of Common Stock to exercise Options;
(iv) the restrictions to be imposed on each share of
Restricted Stock awarded pursuant to Article V of this Plan, which shall
not be less than the minimum restrictions set forth in Section 5.3;
(v) which Options granted shall be Incentive Stock
Options, which shall be Non-Qualified Stock Options, and which shall be
Performance Stock Options;
(vi) the price to be paid for the shares upon the
exercise of each Option, which shall be not less than 100% of the Fair
Market Value per share, as determined by the Committee, of the Common Stock
at the time of granting the Option;
(vii) the period within which each Option shall be
exercised;
(viii) the terms and conditions of each Stock Option
Agreement between BankAmerica and an employee or other individual to whom
the Committee has granted an Option, which, however, shall be in accordance
with the provisions of the Plan; and
(ix) the Committee shall have the power, authority, and
sole discretion to construe, interpret and administer the Plan. The
Committee's decisions construing, interpreting and administering the Plan
shall be conclusive and binding on all parties.
1.5 Eligibility to Receive Grants and Awards. Employees of BankAmerica or
of any of its Subsidiaries who shall, in the judgment of the Committee be
qualified by position, training or ability to contribute substantially to the
progress of BankAmerica, shall be eligible to receive grants and awards under
the Plan. The Committee may also make grants and awards to such other
individuals whose participation in the Plan is determined to be in the best
interest of BankAmerica, provided that the shares of Common Stock to be received
by such individuals are eligible to be registered on Securities and Exchange
Commission Form S-8 (or any successor to such form) under the rules and
regulations in effect at the time of grant or award.
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1.6 Types of Grants and Awards Under Plan. Grants and awards under the
Plan may be in the form of any one or more of the following: (i) Incentive Stock
Options, (ii) Non-Qualified Stock Options, (iii) Performance Stock Options, (iv)
Stock Appreciation Rights, and (v) Restricted Stock.
1.7 Limitation on Available Shares. The maximum number of shares of
Common Stock that shall be available for issuance or delivery under the Plan
with respect to grants and awards made under the Plan on or after April 6, 1987
shall be 7,706,037, plus a maximum of 4,605,338 shares either as of April 6,
1987 subject to outstanding options, or outstanding as restricted stock, granted
under the BankAmerica Corporation Management Incentive Stock Plan as described
in the final paragraph of this Section 1.7. The number of shares available
under the Plan may be, in whole or in part, authorized but unissued shares of
Common Stock or issued shares of Common Stock that have been reacquired by
BankAmerica. Shares of Common Stock shall be issued or delivered upon the
exercise of Options, and may be issued or delivered in payment of Dividend
Equivalent Credits, Stock Appreciation Rights, and Restricted Stock awards in
the discretion of the Committee.
Any shares of Common Stock subject to an Option which for any reason is
cancelled (including shares subject to an Option which is cancelled upon the
exercise of related SARs) or terminated without having been exercised, or which
expires, shall again be available for issuance or delivery under the Plan.
Any shares of Restricted Stock that for any reason are reacquired by
BankAmerica pursuant to Section 5.5 or 5.6, shall again be available for
delivery under the Plan.
Finally, any shares of Common Stock subject to an MISP option that for any
reason is cancelled (including shares subject to an MISP option which is
cancelled upon the exercise of related SARs) or terminated without having been
exercised, or which expires, and any shares of MISP Restricted Stock that for
any reason are reacquired by BankAmerica pursuant to Section 5.5 or 5.6 of the
MISP, shall again be available for issuance or delivery under this Plan.
1.8 Effective Date and Term of Plan. (a) The Plan shall become effective
on April 6, 1987 and the Committee may, in its discretion, make grants and
awards to eligible key officers and other employees of the Company as of that
date, subject, however, to the approval of the Plan by the shareholders of
BankAmerica at the 1987 annual meeting of shareholders. In the event the Plan
is not approved at such meeting, the Plan and all grants and awards hereunder
shall be void, and the Company shall have no obligation to any recipients of
such grants and awards.
(b) The Committee may make grants and awards under the Plan beginning
April 6, 1987 and during each subsequent year until such time as the Plan may be
terminated by the Board in its sole discretion, or as hereinafter provided.
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(c) Unless the shareholders of BankAmerica shall approve an extension
or renewal of the Plan for such new or additional term as they may determine, no
grants and awards shall be made after April 5, 1997. However, all grants and
awards made under the Plan prior to such date shall remain in effect until such
grants and awards shall have been satisfied, terminated, or paid out, or expire,
in accordance with the Plan and the terms of such grants and awards.
ARTICLE II
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS
2.1 Grant of Stock Options. The Committee may, from time to time and
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, grant to any eligible employee or other individual
Incentive Stock Options ("ISOs" or "Options") and/or Non-Qualified Stock Options
("NQSOs" or "Options") (as these terms are defined in Section 1.3), to purchase,
for cash and/or for already-owned shares of Common Stock, such number of shares
of Common Stock as the Committee shall determine.
2.2 Stock Option Agreements. The grant of an ISO or NQSO shall be
evidenced by a written Stock Option Agreement in such form as the Committee may
from time to time determine in accordance with the provisions of the Plan,
executed by BankAmerica. Each Stock Option Agreement shall state the number of
shares of Common Stock subject to the Option, the Option price, the Option
Period, any limitations on the Option, the restrictions on assigning and
transferring the Option described in Section 6.8, the manner of payment for
shares of Common Stock, and such other terms as the Committee shall determine.
2.3 Option Price. The purchase price per share of Common Stock which the
Optionee must deliver upon the exercise of an ISO or NQSO shall be fixed by the
Committee, but shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date the Option is granted.
2.4 Option Period. Each Option granted as an ISO or NQSO shall become
exercisable in part or in full at such time or times as the Committee may
determine and specify in each Stock Option Agreement; provided, however, that no
Option will be exercisable before the date six months after the date the Option
was granted, nor after the first to occur of the following dates:
(a) ten years after the date the Option is granted;
(b) in the case of ISOs, three months after the date of the
Optionee's retirement;
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(c) in the case of NQSOs, three years after the date of the
Optionee's retirement;
(d) three years after death of the Optionee; and
(e) except as provided in Sections 2.4(a) through 2.4(d) above,
termination of the Optionee's employment with the Company, unless the
Committee, in its sole discretion, decides otherwise, in which case the
Committee shall have discretion both (i) to accelerate the exercisability
of any Option (held by an Optionee who is not subject to Section 16) which
would not otherwise become exercisable by the termination of the Optionee's
employment under the terms of the relevant Stock Option Agreement, and (ii)
to extend the exercisability of any exercisable Option (including an Option
that became exercisable pursuant to Section 2.4(e)(i), above) beyond the
termination of the Optionee's employment.
2.5 Limitation on ISOs. Notwithstanding any other provisions in the Plan
or in any ISO agreement, to the extent the aggregate Fair Market Value
(determined at the time the option is granted) of stock with respect to which
ISOs granted after December 31, 1986 are exercisable for the first time by an
Optionee during any calendar year exceeds $100,000, under this Plan and under
all plans of BankAmerica and its subsidiaries, such options shall be treated as
NQSOs. This rule shall be applied by taking options into account in the order
in which they were granted so that options with the earliest grant date will
receive ISO treatment.
No ISO shall be granted to any person who at the time owns more than ten
percent of total combined voting power of all classes of stock of BankAmerica or
of any Subsidiaries.
2.6 Manner of Paying Option Price. On exercise of each ISO or NQSO, the
Option Price shall be paid as follows: (a) in cash, (b) in already-owned shares
of Common Stock, or (c) in some combination of cash and shares, as specified in
the Stock Option Agreement or as otherwise permitted by the Committee. Already-
owned shares of Common Stock must have been owned by the Optionee at the time of
exercise for at least the period of time specified in the Stock Option
Agreement, and shall be valued at their Fair Market Value on the date of
exercise.
2.7 Exercise of Option. The Committee shall establish, and shall set
forth in each Stock Option Agreement, the procedures governing the exercise of
an ISO or NQSO. In general, subject to such specific provisions, an ISO or NQSO
shall be exercised as follows:
(a) the Optionee shall deliver written notice that he or she intends
to exercise the Option to the Company department or officer designated in
the Stock Option Agreement;
(b) the Optionee shall pay the full Option Price at the time of
exercise, according to Section 2.6 above; and
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(c) as soon as practicable after receipt of such notice and payment,
the Company shall direct BankAmerica's transfer agent to register the
shares of Common Stock in the name of the Optionee.
2.8 Cancellation of SARs. The exercise of an ISO or NQSO with respect to
a share of Common Stock shall cancel any SAR related to such share.
2.9 Cancellation and Regrant of Non-Qualified Stock Options. With the
consent of the Optionee of a NQSO, the Committee in its sole discretion may
cancel particular NQSOs, and regrant to the same Optionee NQSOs to purchase the
same or a different number of shares of Common Stock. The Committee shall
regrant NQSOs on such terms as it may determine in its sole discretion, provided
that the Option Price shall be not less than the Fair Market Value of the Common
Stock on the date of regrant.
2.10 Retirement of Optionee at Age Sixty-Five or Later. Upon retirement
at age sixty-five or later, the Optionee (other than an individual not employed
by the Company at the date of grant) shall become immediately entitled to
purchase:
(1) all shares of Common Stock covered by Optionee's NQSOs and,
(2) shares of Common Stock covered by Optionee's ISOs subject to the
rules set forth in the first sentence of Section 2.5
without regard to whether the NQSOs or ISOs were fully exercisable at the
retirement date under the terms of the Stock Option Agreements and the Plan.
The Optionee may purchase any or all of the shares he or she is entitled to
purchase at any time or times during the period, if any, beginning on the date
the Option first becomes exercisable and ending on the first to occur of the
following dates:
(a) the end of the Option Period as provided in Section 2.4
above;
(b) in the case of ISOs, three months after the date of the
Optionee's retirement.
2.11 Early Retirement of Optionee. Upon retirement prior to age sixty-
five, the Optionee (other than an individual not employed by the Company at the
date of grant) may
(a) exercise any Option to the extent such Option was exercisable on
the retirement date; or
(b) within the sole discretion of the Committee, become immediately
entitled to purchase:
(1) all shares of Common Stock covered by Optionee's NQSOs and,
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(2) shares of Common Stock covered by Optionee's ISOs subject to
rules set forth in the first sentence of Section 2.5
without regard to whether the NQSOs or ISOs were fully exercisable at the
retirement date under the terms of the Stock Option Agreements and the Plan.
The Optionee may purchase any or all of the shares he or she is entitled to
purchase at any time or times during the period, if any, beginning on the date
the Option first becomes exercisable and ending on the first to occur of the
following dates:
(a) the end of the Option Period as provided in Section 2.4 above;
(b) in the case of ISOs, three months after the date of the
Optionee's early retirement; and
(c) in the case of NQSOs, three years after the date of the
Optionee's early retirement.
2.12 Termination on Leave of Absence or Extraordinary Circumstances. With
respect to Optionees who were employed by the Company on the date of grant, upon
termination of the Optionee's employment with the Company by reason of (a) leave
of absence treated as termination of employment pursuant to Section 6.3 or (b)
extraordinary circumstances, as determined by the sole discretion of the
Committee, the Optionee may exercise any ISO or NQSO to the extent such Option
was exercisable on the date of termination of employment at any time or times up
to and including the first to occur of the following dates:
(i) the end of the Option Period as provided in Section 2.4 above;
and
(ii) three months after the date of the Optionee's termination.
2.13 Termination of Employment of Optionee. With respect to Optionees who
were employed by the Company on the date of grant, except as provided in
Sections 2.4(e), 2.10, 2.11, 2.12 and 2.14, all ISOs and NQSOs shall become non-
exercisable upon termination of the Optionee's employment with the Company.
Termination of an Optionee's employment with the Company shall be deemed to
include a change in ownership of the Optionee's employer such that the
Optionee's employer ceases to be BankAmerica or one of its Subsidiaries,
PROVIDED, HOWEVER, that at any time within thirty (30) days prior to such a
change in ownership, or within ninety (90) days after termination of the
Optionee's employment with the Company, within the sole discretion of the
Committee, the Optionee may become immediately entitled to purchase:
(1) all shares of Common Stock covered by Optionee's NQSOs and,
(2) shares of Common Stock covered by Optionee's ISOs subject to
the rules set forth in the first sentence of Section 2.5
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without regard to whether the NQSOs or ISOs were fully exercisable immediately
prior to termination under the terms of the Stock Option Agreements and the
Plan.
2.14 Death of Optionee. If any Optionee entitled to exercise an ISO or
NQSO
(a) terminates employment with the Company by reason of death, or
(b) dies after termination of employment with the Company and
during the Option Period, or
(c) with respect to an individual who was not employed by the
Company at the date of grant, dies during the Option Period
(A) the Optionee's estate and/or (B) a person who acquires the right to exercise
such Option by bequest or inheritance, may
(a) exercise such Option to the extent of the number of shares of
Common Stock which could have been purchased by the Optionee on the date of
death; or
(b) within the sole discretion of the Committee, become
immediately entitled to purchase:
(1) all shares of Common Stock covered by Optionee's NQSOs
and,
(2) shares of Common Stock covered by Optionee's ISOs subject to
the rules set forth in the first sentence of Section 2.5
without regard to whether the NQSOs or ISOs were fully exercisable at the date
of death under the terms of the Stock Option Agreements and the Plan. The shares
covered by the Options may be purchased at any time or times during the period,
if any, beginning on the date the Option first becomes exercisable and ending on
the first to occur of the following dates:
(a) the end of the Option Period as provided in Section 2.4 above;
and
(b) three years following the date of the Optionee's death.
ARTICLE III
Performance Stock Options
3.1 Grant of Performance Stock Options. The Committee may, from time to
time and subject to the provisions of the Plan and such other terms and
conditions as the
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Committee may prescribe, grant to any eligible employee or other individual
Performance Stock Options ("PSOs" or "Options") (as these terms are defined in
Section 1.3) to purchase, for cash and/or for already-owned shares of Common
Stock, such number of shares of Common Stock as the Committee shall determine.
3.2 Stock Option Agreements. The grant of a PSO shall be evidenced by a
written Stock Option Agreement in such form as the Committee may from time to
time determine in accordance with the provisions of the Plan, executed by
BankAmerica. Each Stock Option Agreement shall state the number of shares of
Common Stock subject to the Option, the Option Price, the Option Period, any
limitations on the Option, the restrictions on assigning and transferring the
Option described in Section 6.8, the manner of payment for shares of Common
Stock, and such other terms as the Committee shall determine.
3.3 Option Price. The purchase price per share of Common Stock which the
Optionee must deliver upon the exercise of a PSO shall be fixed by the
Committee, but shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date the Option is granted.
3.4 Option Period. Each Option granted as a PSO shall become exercisable
in part or in full at such time or times as the Committee may determine and
specify in each Stock Option Agreement; provided, however, that no PSO will be
exercisable before the date six months after the date the Option was granted,
nor after the first to occur of the following dates:
(a) ten years after the date the Option is granted;
(b) three years after the date of the Optionee's retirement;
(c) three years after death of the Optionee; and
(d) except as provided in Sections 3.4(a) through 3.4(c) above,
termination of the Optionee's employment with the Company, unless the
Committee, in its sole discretion, decides otherwise, in which case the
Committee shall have discretion both (i) to accelerate the exercisability
of any Option (held by an Optionee who is not subject to Section 16) which
would not otherwise become exercisable by the termination of the Optionee's
employment under the terms of the relevant Stock Option Agreement, and (ii)
to extend the exercisability of any exercisable Option (including an Option
that became exercisable pursuant to Section 3.4(d)(i), above) beyond the
termination of the Optionee's employment.
3.5 Dividend Equivalent Credit. A Dividend Equivalent Credit ("DEC") is
the amount credited to the account of an Optionee (the "DEC Account") equal to a
percentage designated by the Committee in each Stock Option Agreement, of the
dividends per share paid by BankAmerica on its Common Stock. The Committee
shall maintain one DEC
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Account with respect to each outstanding Stock Option Agreement for PSOs.
Amounts credited to the DEC Account shall be measured in terms of shares of
Common Stock (the "Share Equivalents"), although the DEC Accounts shall be
wholly unfunded until the amounts credited are paid out pursuant to Sections
3.8, 3.9 and 3.10 below.
DECs shall be credited as of any date on which BankAmerica pays dividends
on its Common Stock. DECs shall be credited in the form of the number of Share
Equivalents equal to
(a) the product of (i) the number of shares with respect to which a
DEC is being credited pursuant to Section 3.6 below, multiplied by (ii) the
dollar amount of the dividends per share paid on that date, all multiplied
by (iii) the percentage specified in the Stock Option Agreement
DIVIDED BY
(b) the Fair Market Value of one share of Common Stock on the date
the related dividends are paid.
Except as provided in Section 3.12, the balance in any DEC Account shall be
reduced to zero upon cancellation of the related PSO(s).
3.6 Granting of Dividend Equivalent Credits. The Committee shall, subject
to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, grant the Optionee one DEC with respect to (a) each
share of Common Stock subject to a PSO outstanding and unexercised as of the
record date for the related dividend whether or not such PSO is then exercisable
under the Plan and the Stock Option Agreement, and (b) each Share Equivalent
previously credited to the Optionee's DEC Account, as those terms are defined in
Section 3.5. However, after the Optionee's employment with the Company is
terminated, no portion of any dividend paid by BankAmerica on its Common Stock
shall be credited to the Optionee's DEC Account(s).
3.7 Manner of Paying Option Price. On exercise of each PSO, the Option
Price shall be paid as follows: (a) in cash, (b) in already-owned shares of
Common Stock, or (c) in some combination of cash and shares, as specified in the
Stock Option Agreement or as otherwise permitted by the Committee. Already-
owned shares of Common Stock must have been owned by the Optionee at the time of
exercise for at least the period of time specified in the Stock Option
Agreement, and shall be valued at their Fair Market Value on the date of
exercise.
3.8 Exercise of Options. The Committee shall establish, and shall set
forth in each Stock Option Agreement, the procedures governing the exercise of a
PSO. In general, subject to such specific provisions, a PSO shall be exercised
as follows:
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(a) the optionee shall deliver written notice that he or she intends
to exercise the Option to the Company department or officer designated in
the Stock Option Agreement;
(b) the Optionee shall pay the full Option Price at the time of
exercise, according to Section 3.7 above; and
(c) as soon as practicable after receipt of such notice and payment,
the Company shall
(i) direct BankAmerica's transfer agent to register the shares
of Common Stock in the name of the Optionee, and
(ii) deliver to the Optionee all or that portion of the related
DEC Account which equals (A) the total DEC Account, multiplied by (B)
the quotient of (1) the number of PSOs being exercised, divided by (2)
the total number of PSOs then outstanding under the Stock Option
Agreement,
all payable according to Section 3.10 below.
3.9 Surrender of Performance Stock Options. At any time when (a) the
Option Price of a PSO exceeds the Fair Market Value of the Common Stock and (b)
all PSOs granted pursuant to the same Stock Option Agreement are fully
exercisable, the Optionee may surrender all but not less than all of his or her
PSOs by delivering written notice to the Company department or officer
designated in the Stock Option Agreement, without payment of the Option Price.
As soon as practicable after receipt of such notice, the Company shall deliver
to the Optionee the greater of the following:
(a) the "Net Underwater Amount," equal to (i) the total DEC Account
reduced by (ii) the difference between (A) the aggregate Option Price of
the PSOs surrendered, and (B) the aggregate Fair Market Value on the date
of surrender of the Common Stock issuable or deliverable with respect to
the PSOs surrendered; and
(b) a percentage, determined by the Committee and specified in the
Stock Option Agreement, of the related DEC Account. Payments of the DEC
Accounts shall be made according to Section 3.10 below.
3.10 Payments from the DEC Account. Amounts payable to the Optionee from
his or her DEC Account upon exercise of PSOs or the related SARs or surrender of
PSOs may be paid either (a) in shares of Common Stock; (b) in cash; or (c) in
some combination of shares and cash, as determined by the Committee, PROVIDED
THAT at any time when the Option constitutes Stock Appreciation Rights pursuant
to Article IV of the Plan, (i) if the Optionee exercises the SAR or surrenders
the related PSO during the Window Period described in Section 4.5(a), the DEC
Account shall be paid out in cash and valued as provided in Section
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4.5(b), and (ii) if the Optionee exercises the SAR or surrenders the related PSO
at any time outside that Window Period, the DEC Account shall be paid out in
shares of Common Stock and valued as provided in Section 4.5(c).
3.11 Cancellation of SARs. The exercise of a PSO with respect to a share
of Common Stock shall cancel any SAR related to such share.
3.12 Cancellation and Regrant of Performance Stock Options. With the
consent of the holder of a Performance Stock Option, the Committee in its sole
discretion may cancel particular PSOs, and regrant to the same Optionee PSOs to
purchase the same or a different number of shares of Common Stock. The
Committee shall regrant PSOs on such terms as it may determine in its sole
discretion, provided (a) that the Option Price shall not be less than the Fair
Market Value of the Common Stock on the date of regrant, and (b) that the DEC
Account shall not thereby become payable in whole or in part to the Optionee.
The Committee may, in its sole discretion, provide that some or all of the DEC
Account maintained with respect to the PSOs cancelled may be immediately
credited to the PSOs which are regranted.
3.13 Retirement of Optionee at Age Sixty-Five or Later. Upon retirement
at age sixty-five or later, the Optionee (other than an individual not employed
by the Company at the date of grant) shall become immediately entitled to
purchase all shares of Common Stock covered by the PSO without regard to whether
the Option was fully exercisable at the retirement date under the terms of the
Plan and the Stock Option Agreement. The Optionee may purchase any or all of
the shares he or she is entitled to purchase at any time or times up to and
including the first to occur of the following dates:
(a) the end of the Option Period as provided in Section 3.4 above;
and
(b) three years after the Optionee's retirement.
3.14 Early Retirement of Optionee. Upon early retirement prior to age
sixty-five, the Optionee (other than an individual not employed by the Company
at the date of grant) may
(a) exercise any Option to the extent such Option was exercisable on
the retirement date; or
(b) within the sole discretion of the Committee, become immediately
entitled to purchase all shares of Common Stock covered by the Option
without regard to whether the PSO was fully exercisable at the retirement
date under the terms of the Plan and the Stock Option Agreement.
The Optionee may purchase any or all of the shares he or she is entitled to
purchase at any time or times up to and including the first to occur of the
following dates:
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(a) the end of the Option Period as provided in Section 3.4 above;
and
(b) three years after the date of the Optionee's early retirement.
3.15 Termination on Leave of Absence or Extraordinary Circumstances. With
respect to Optionees who were employed by the Company on the date of grant, upon
termination of the Optionee's employment with the Company by reason of (a) leave
of absence treated as termination of employment pursuant to Section 6.3 or (b)
extraordinary circumstances, as determined in the sole discretion of the
Committee, the Optionee may exercise any Option to the extent such Option was
exercisable on the date of termination of employment at any time or times up to
and including the first to occur of the following dates:
(a) the end of the Option Period as provided in Section 3.4 above;
and
(b) three months after the date of the Optionee's termination.
3.16 Termination of Employment of Optionee. With respect to Optionees who
were employed by the Company at the date of grant, except as provided in
Sections 3.4(d), 3.13, 3.14, 3.15 and 3.17, all Options shall become non-
exercisable upon termination of the Optionee's employment with the Company.
Termination of an Optionee's employment with the Company shall be deemed to
include a change in ownership of the Optionee's employer such that the
Optionee's employer ceases to be BankAmerica or one of its Subsidiaries,
PROVIDED, HOWEVER, that at any time within thirty (30) days prior to such a
change in ownership or within ninety (90) days after termination of the
Optionee's employment with the Company, within the sole discretion of the
Committee, the Optionee may become immediately entitled to purchase all shares
of Common Stock covered by the Option without regard to whether the Option would
be fully exercisable at the effective date of the change in ownership under the
terms of the Plan and the Stock Option Agreement.
3.17 Death of Optionee. If an Optionee entitled to exercise a PSO
(a) terminates employment with the Company by reason of death, or
(b) dies after termination of employment with the Company and during
the Option Period, or
(c) with respect to an individual who was not employed by the Company
on the date of grant, dies during the Option Period,
(A) the Optionee's estate and/or (B) a person who acquires the right to exercise
such Option by bequest or inheritance, may
(a) exercise such Option to the extent of the number of shares of
Common Stock which could have been purchased by the Optionee on the date of
death; or
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(b) within the sole discretion of the Committee, become immediately
entitled to purchase all shares of Common Stock covered by the Option
without regard to whether the Option was fully exercisable at the date of
death under the terms of the Plan and the Stock Option Agreement at any
time or times up to and including the first to occur of the following
dates:
(a) the end of the Option Period as provided in Section 3.4
above; and
(b) three years following the date of the Optionee's death.
ARTICLE IV
Stock Appreciation Rights
4.1 Grant of Stock Appreciation Rights. The Committee may in its sole
discretion grant Stock Appreciation Rights ("SARs") in tandem with Options. The
Committee may also grant Options without SARs.
Except as provided in Section 4.5(c) below, an SAR shall represent the
right to receive payment (the "SAR Value") equal to the amount, if any, by which
(a) the Fair Market Value of one share of Common Stock on the date of exercise
of the SAR exceeds (b) the Option Price of one share of Common Stock which is
subject to the SAR's related Option.
The Committee shall not grant an SAR with respect to an ISO unless,
pursuant to applicable law and rules and regulations of the Internal Revenue
Service, the SAR may be attached to the ISO without causing the ISO to fail to
meet the requirements of Section 422A of the Internal Revenue Code.
4.2 Agreements Evidencing SARs. SARs granted under the Plan shall be
included in the written Stock Option Agreement between BankAmerica and the
Optionee.
4.3 Exercise of SARs. An Optionee who has been granted SARs may, from
time to time, elect to exercise one or more SARs and thereby become entitled to
receive payment in the amount and from and within the time determined pursuant
to Sections 2.4 and 3.4. An SAR shall be exercisable only to the same extent and
subject to the same conditions as the Option related thereto is exercisable.
The Committee may, in its discretion, prescribe additional conditions on the
exercise of any SAR.
4.4 Amount of Payment. Upon the exercise of each SAR, the Optionee shall
be entitled to receive
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(a) payment of the amount represented by the SAR, together with
(b) all or that portion of the DEC Account which equals the product
of (i) the total DEC Account, multiplied by (ii) the quotient of (A) the
number of SARs being exercised, divided by (B) the total number of related
PSOs then outstanding under the related Option.
4.5 Form and Timing of Payment. (a) Exercise of SARs for Cash or Common
Stock. SARs exercised during the Window Period described below shall be payable
only in cash, and SARs exercised outside the Window Period shall be payable only
in shares of Common Stock. A "Window Period" is a period (i) beginning on the
third business day following the date of public release of BankAmerica's
quarterly and annual summary statements of revenues and earnings and (ii) ending
on the twelfth business day following such date.
(b) Amount of Cash Payable on Exercise of SARs. When SARs are
exercised during the Window Period, the Optionee shall receive a cash amount
equal to (i) the number of SARs exercised multiplied by (ii) the difference
between (A) the highest Fair Market Value of one share of Common Stock as of any
day during the Window Period, and (B) the Option Price specified for the related
Option.
(c) Number of Shares Issuable or Deliverable on Exercise of SARs.
When SARs are exercised outside the Window Period, the Optionee shall receive
the number of whole shares of Common Stock equal to (i) the aggregate SAR Value
(as defined in Section 4.1) of the SARs exercised divided by (ii) the Fair
Market Value (as defined in Section 1.3) on the date of exercise. The Company
shall deliver cash in lieu of fractional shares.
4.6 Cancellation of Related Options. The exercise of an SAR shall cancel
any NQSO or PSO to which it relates, to the extent of the exercise. Any
exercise of an SAR with respect to an ISO must be made in accordance with
Section 4.1.
4.7 Termination of Employment of Optionee. Except as provided in Section
4.8 below, in the event that the holder of an SAR ceases to be employed with the
Company for any reason, his or her SAR shall be exercisable only to the same
extent and upon the same conditions that the Option related thereto is
exercisable only until the sooner of (a) six months after the date he or she
ceases to be an officer or director as defined in Section 16, and (b) the end of
the Option Period of the related Options.
4.8 Death of Optionee. In the event that the holder of an SAR dies, his
or her SAR shall terminate, and only the related Option shall be exercisable,
pursuant to Sections 2.14 and 3.17.
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ARTICLE V
RESTRICTED STOCK
5.1 Introduction. BankAmerica has outstanding shares of restricted stock
granted under the BankAmerica Corporation Restricted Stock Bonus Plan (the
"Bonus Plan") and the MISP. Restricted stock already granted under the Bonus
Plan and the MISP will continue to be held under the terms of those plans,
except as provided in Section 1.7 of this Plan. Only grants of Restricted Stock
made on or after the effective date of this new Plan shall be governed by the
terms of this Article V.
5.2 Award of Restricted Stock. The Committee may, from time to time and
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, award shares of Common Stock to be held under the
restrictions set forth in this Article to any eligible employee or other
individual. If an eligible employee has been employed less than six months, any
award shall only be made from Common Stock which is held as treasury stock by
BankAmerica. BankAmerica shall issue or deliver shares of registered Restricted
Stock awarded hereunder in the name of the employee or other individual
concerned (the "Restricted Stockholder").
5.3 Minimum Restrictions on Disposition of Stock Awards. With respect to a
Restricted Stockholder who was employed by the Company on the date of grant, the
Restricted Stockholder may not, under any circumstances, voluntarily dispose of
any of the Restricted Stock prior to the first to occur of the following events:
(a) the date on which the Restricted Stockholder completes the period
of continuous service with the Company following the award date specified
by the Committee for such award;
(b) delivery of the Restricted Stock to the Restricted Stockholder
following a Committee determination pursuant to Section 6.6 hereof in
connection with a Change in Control;
(c) the Restricted Stockholder's retirement or death; or
(d) delivery of the Restricted Stock to the Restricted Stockholder
following his or her termination of employment prior to retirement or
death.
With respect to any other individual, the Restricted Stockholder may not, under
any circumstances, voluntarily dispose of any of the Restricted Stock prior to
the first to occur of the following events:
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(a) the date on which the individual satisfies the conditions
specified in the grant;
(b) the Restricted Stockholder's death.
The limitations in this Section 5.3 will hereinafter be referred to as the
"minimum restrictions."
5.4 Optional Restrictions. In addition to the minimum restrictions, the
Committee may impose additional restrictions ("optional restrictions") upon the
Restricted Stockholder's voluntary disposition and release from escrow of the
Restricted Stock, either at the time the Committee makes an award of such
Restricted Stock or at any subsequent time before the minimum restrictions
expire. The Committee may impose optional restrictions (such as, without
limitation, permitting such disposition and release only in installments over a
period of years) as it may deem in the best interests of the Restricted
Stockholder, or in the case of the Restricted Stockholder's death, of the heirs
or legatees who become entitled to such Restricted Stock by the applicable laws
of inheritance or under the terms of the Restricted Stockholder's will.
5.5 Termination of Employment of Restricted Stockholder for Gross
Misconduct. If a Restricted Stockholder's services are terminated for cause for
gross misconduct, all shares awarded to any Restricted Stockholder under this
Plan shall be forfeited, and the Committee shall direct such shares to be
transferred and delivered to BankAmerica. Gross misconduct includes, but is not
limited to, acts of dishonesty, such as theft, embezzlement, and falsification
of the Company's records with intent to deceive; breach of trust; knowing
violation of rules established by the Company; and any crime determined by the
Company to result in termination of employment.
5.6 Termination of Employment of Restricted Stockholder not Involving
Gross Misconduct.
(a) Should a Restricted Stockholder who was employed by the Company
at the date of grant terminate his or her employment with the Company prior
to (i) the date on which he or she completes the period of continuous
service for the Company following the award date specified by the Committee
for such award, or (ii) his or her death or retirement: or
(b) Should the Company terminate his or her employment for any reason
other than for a cause set forth in Section 5.5 above,
BankAmerica shall reacquire all the Restricted Stock without the payment of
consideration in any form to such Restricted Stockholder and the Restricted
Stockholder shall unconditionally forfeit any right, title or interest to such
Restricted Stock, unless the Committee, within 90 days of such termination,
determines in its sole discretion to permit the Restricted Stockholder to retain
all or any part of the Restricted Stock. Upon direction of the
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Committee, all forfeited Restricted Stock shall be transferred and delivered to
BankAmerica. Termination of a Restricted Stockholder's employment with the
Company shall be deemed to include a change in ownership of the Restricted
Stockholder's employer such that the Restricted Stockholder's employer ceases to
be BankAmerica or one of its Subsidiaries.
5.7 Escrow. In order to administer the restrictions set forth in Sections
5.3, 5.4, 5.5 and 5.6 above, the certificates evidencing Restricted Stock,
although issued in the name of the Restricted Stockholder, shall be held by Bank
of America National Trust and Savings Association (the "Bank") in escrow subject
to delivery to the Restricted Stockholder or to BankAmerica at such times and in
such amounts as the Committee shall direct under the terms of this Plan. When
an employee or other individual accepts an award of Restricted Stock pursuant to
the Plan, he or she thereby grants an irrevocable power of attorney to the Bank
to cause the transfer and delivery to BankAmerica of any of such Restricted
Stock which the Committee shall direct to be so transferred and delivered
pursuant to Sections 5.5 and 5.6 above.
5.8 Dividends on Restricted Stock. Even while the Restricted Stock is
held in escrow, all dividends BankAmerica pays on the Restricted Stock shall be
delivered directly to the Restricted Stockholder, not the escrow account.
5.9 Voting Rights. Even while the Restricted Stock is held in escrow, the
Restricted Stockholder shall have the same voting rights with respect to the
Restricted Stock as those provided to other shareholders of Common Stock.
ARTICLE VI
Miscellaneous
6.1 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or messenger, addressed
(a) if to the Company, at
BankAmerica Corporation
555 California Street
San Francisco, CA 94104
Attn: c/o Bank of America NT&SA
Executive Programs #3005
Corporate Human Resources
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(b) if to the Optionee, at the last address shown on the Company's
personnel records, or
(c) to such address as either the Company or the Optionee shall later
designate by notice to the other.
6.2 Amendments of Plan. The Board may, at any time and from time to time,
modify, amend, suspend or terminate the Plan in any respect. Notwithstanding
the above, however, any modification, amendment, suspension or termination of
the Plan shall not affect an Optionee's or Restricted Stockholder's rights to a
grant or award previously made, except as provided in Section 1.8(a), or except
with his or her consent.
6.3 Leaves of Absence. The Committee shall be entitled to make such
rules, regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence from the Company taken by the recipient of any
grant or award under the Plan. Without limiting the generality of the
foregoing, the Committee shall be entitled to determine (a) whether or not any
such leave of absence shall be treated as a termination of employment with the
Company within the meaning of the Plan and (b) the impact, if any, of any such
leave of absence on grants and awards under the Plan.
6.4 Dilution and Other Adjustments. In the event of any change in the
outstanding Common Stock by reason of a stock dividend or stock split,
recapitalization, merger, consolidation, exchange of shares or other similar
corporate change, then the Committee may appropriately adjust the aggregate
number of shares of Common Stock which is available for issuance or delivery
under the Plan (as set forth in Section 1.7), the number of shares of Common
Stock subject to Options and SARs granted under the Plan, the number of Share
Equivalents credited to DEC Accounts pursuant to Section 3.5, the Option Price
of Options granted under the Plan, the number of shares of Restricted Stock held
in escrow pursuant to Section 5.7, and any and all other matters deemed
appropriate by the Committee.
6.5 General Restriction. Each grant and award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or federal law, (b) the consent or approval of any government regulatory body,
or (c) an agreement by the recipient of a grant or award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a condition
of, or in connection with, the making of a grant or award or the issue, delivery
or purchase of shares of Common Stock thereunder, then such grant or award shall
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
6.6 Change in Control. If BankAmerica undergoes a Change in Control (as
defined in Section 1.3(c)), the following shall apply:
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(a)(i) All outstanding Options and related SARs shall be immediately
exercisable in full; (ii) all DEC Accounts related to any PSOs shall be
paid in full as soon as practicable following the Change in Control; and
(iii) all Restricted Stock shall be immediately released free from all
restrictions and shall be delivered to the Restricted Stockholder as soon
as practicable following the Change in Control.
(b) Except as provided in the following sentence, in the event an
employee terminates employment with the Company following a Change in
Control, his or her Options and related SARs shall remain exercisable for a
period of three years following termination of employment, not to exceed
the original term of the Option or related SAR. The preceding sentence
shall not apply to an incentive stock option unless the option agreement
gives the Committee discretion to permit the incentive stock option to
remain exercisable following termination of the optionholder's employment,
in which case the incentive stock option shall be exercisable for three
months following termination of employment without further Committee
action.
(c) [Intentionally left blank]
(d) The Company shall have the right to deduct from any settlement of
any Option, SAR or Restricted Stock an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to
take such other action as may be necessary to satisfy any such withholding
obligation.
6.7 Withholding Taxes. Whenever the Company proposes to deliver shares of
Common Stock under the Plan, the Company shall have the right to require the
individual who is to receive the shares to remit to the Company, prior to the
delivery of any certificate or certificates for such shares, an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements. Whenever, under the Plan, payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy any federal, state
and/or local withholding tax requirements.
6.8 Non-Assignability. No Optionee or Restricted Stockholder shall have
the right to alienate, assign, encumber, hypothecate or pledge his or her
interest in any award under the Plan, voluntarily or involuntarily, and any
attempt to so dispose of any such interest prior to payment thereof shall be
void. Notwithstanding the preceding sentence, the Company shall have the right
to offset from any unpaid or deferred award any amounts due and owing from the
Optionee or Restricted Stockholder to the extent permitted by law.
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6.9 No Right to Employment. Nothing in the Plan nor in any agreement
entered into pursuant to the Plan shall confer upon any Optionee or Restricted
Stockholder the right to continue in the employment of the Company, nor affect
any right which the Company may have to terminate the employment of such person.
6.10 Rights as Shareholder. No Optionee shall have rights as a
shareholder with respect to shares of Common Stock awarded to him or her unless
and until the certificates for such shares are delivered to him or her.
Restricted Stockholders have full voting rights with respect to Restricted
Stock, as outlined in Section 5.9 hereof.
6.11 Entire Plan. This document is a complete statement of the Plan. As
of its effective date this document supersedes all prior plans, representations
and proposals, written or oral, relating to its subject matter, except as
otherwise provided in Section 1.7 hereof. The Company shall not be bound by or
liable to any person for any representation, promise or inducement made by any
employee or agent of it which is not embodied in this document.
6.12 Governing Law. The Plan shall be construed and enforced in
accordance with California law.
The resolution amending Sections 1.3(c) and 6.6 provided that no
modification, suspension, amendment or termination of the Plan may be made which
would adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option, stock appreciation right, restricted
stock unit or other stock based award granted under the Plan prior to the date
of such modification, suspension, amendment or termination.
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EXHIBIT 10.c.
[LOGO OF BANKAMERICA CORPORATION APPEARS HERE]
BANKAMERICA CORPORATION
MANAGEMENT INCENTIVE STOCK PLAN
As amended
Last Amended August 7, 1995
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BANKAMERICA CORPORATION
MANAGEMENT INCENTIVE STOCK PLAN
AS AMENDED THROUGH AUGUST 7, 1995
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
----
ARTICLE I
<S> <C>
GENERAL..................................................................... 1
1.1 Background of Plan................................................ 1
1.2 Purpose of Plan................................................... 1
1.3 Definitions....................................................... 1
1.4 Administration of Plan............................................ 4
1.5 Eligibility to Receive Grants and Awards.......................... 5
1.6 Types of Grants and Awards Under Plan............................. 5
1.7 Limitation on Available Shares.................................... 5
1.8 Effective Date and Term of Plan................................... 6
ARTICLE II
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS..................... 6
2.1 Grant of Stock Options............................................ 6
2.2 Stock Option Agreements........................................... 6
2.3 Option Price...................................................... 7
2.4 Option Period..................................................... 7
2.5 Limitation on ISOs................................................ 7
2.6 Manner of Paying Option Price..................................... 8
2.7 Exercise of Option................................................ 8
2.8 Cancellation of SARs.............................................. 8
2.9 Cancellation and Regrant of Non-Qualified Stock Options........... 8
2.10 Retirement of Optionee at Age Sixty-Five or Later................. 9
2.11 Early Retirement of Optionee...................................... 9
2.12 Termination on Leave of Absence or Extraordinary Circumstances.... 10
2.13 Termination of Employment of Optionee............................. 10
2.14 Disability or Death of Optionee................................... 10
ARTICLE III
PERFORMANCE STOCK OPTIONS................................................... 11
3.1 Grant of Performance Stock Options................................ 11
3.2 Stock Option Agreements........................................... 11
3.3 Option Price...................................................... 11
3.4 Option Period..................................................... 11
3.5 Dividend Equivalent Credit........................................ 12
3.6 Granting of Dividend Equivalent Credit............................ 12
3.7 Manner of Paying Option Price..................................... 12
3.8 Exercise of Options............................................... 13
3.9 Surrender of Performance Stock Options............................ 13
3.10 Payments from the DEC Account..................................... 14
3.11 Cancellation of SARs.............................................. 14
</TABLE>
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<TABLE>
<S> <C>
3.12 Cancellation and Regrant of Performance Stock Options............. 14
3.13 Retirement of Optionee at Age Sixty-Five or Later................. 14
3.14 Early Retirement of Optionee...................................... 15
3.15 Termination on Leave of Absence or Extraordinary Circumstances.... 15
3.16 Termination of Employment of Optionee............................. 15
3.17 Disability or Death of Optionee................................... 16
ARTICLE IV
STOCK APPRECIATION RIGHTS................................................... 16
4.1 Grant of Stock Appreciation Rights................................ 16
4.2 Agreements Evidencing SARs........................................ 17
4.3 Exercise of SARs.................................................. 17
4.4 Amount of Payment................................................. 17
4.5 Form and Timing of Payment........................................ 17
4.6 Cancellation of Related Options................................... 17
4.7 Termination of Employment of Optionee............................. 17
4.8 Death of Optionee................................................. 18
ARTICLE V
RESTRICTED STOCK PLAN....................................................... 18
5.1 Introduction...................................................... 18
5.2 Award of Restricted Stock......................................... 18
5.3 Minimum Restrictions on Disposition of Stock Awards............... 18
5.4 Optional Restrictions............................................. 19
5.5 Termination of Employment of Restricted Stockholder for
Gross Misconduct.................................................. 19
5.6 Termination of Employment of Restricted Stockholder not
Involving Gross Misconduct........................................ 19
5.7 Escrow............................................................ 20
5.8 Dividends on Restricted Stock..................................... 20
5.9 Voting Rights..................................................... 20
ARTICLE VI
MISCELLANEOUS............................................................... 20
6.1 Notices........................................................... 20
6.2 Amendments to Plan................................................ 20
6.3 Leaves of Absence................................................. 21
6.4 Dilution and Other Adjustments.................................... 21
6.5 General Restriction............................................... 21
6.6 Change in Control................................................. 21
6.7 Withholding Taxes................................................. 22
6.8 Non-Assignability................................................. 22
6.9 No Right to Employment............................................ 22
6.10 Rights as Shareholder............................................. 22
6.11 Entire Plan....................................................... 22
6.12 Governing Law..................................................... 23
</TABLE>
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BANKAMERICA CORPORATION
MANAGEMENT INCENTIVE STOCK PLAN
ARTICLE I
General
1.1 Background of Plan. BankAmerica Corporation hereby establishes the
BankAmerica Corporation Management Incentive Stock Plan (the "Plan"). The Plan
creates new stock option plans in addition to the BankAmerica Corporation Stock
Option Plans A and B, and amends and restates the BankAmerica Corporation
Restricted Stock Bonus Plan.
1.2 Purpose of Plan. The purpose of the Plan is to provide contingent
financial incentive to key executive officers of BankAmerica Corporation and its
present and future Subsidiaries (as defined in Section 1.3(m)). The Plan will
offer competitive levels of incentive compensation related to long-term
corporate financial performance to those key officers and other employees of the
Company who by virtue of their position and efforts, contribute to or
substantially influence the financial success of BankAmerica Corporation over
multiple-year periods. The Plan is also intended as a means of increasing
officer shareholdings, thereby strengthening the commonality of interest between
Company shareholders and key officers and other employees in the Company's
management, and as an aid in attracting, retaining and motivating key officers
and other employees of outstanding abilities and specialized skills.
1.3 Definitions. As used in the Plan and the related Stock Option
Agreements, the following terms, when written with initial capital letters, will
have the meanings stated below:
(a) BankAmerica means BankAmerica Corporation, a Delaware
corporation.
(b) Board means Board of Directors of BankAmerica.
(c) Change in Control means that one of the following events has
occurred:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (i) the then
outstanding shares of common stock of BankAmerica (the "Outstanding
BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of BankAmerica entitled to vote
generally in the election of directors (the "Outstanding BankAmerica
Voting Securities"); provided,
1
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however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from BankAmerica (ii) any acquisition by
BankAmerica, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or (iv) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) below.
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by BankAmerica's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board.
(iii) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets
of BankAmerica or any of its subsidiaries (a "Business Combination"),
in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding BankAmerica Common
Stock and Outstanding BankAmerica Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly,
more than 80% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns BankAmerica or all or substantially
all of BankAmerica's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding BankAmerica Common Stock and Outstanding BankAmerica
Voting Securities, as the case may be, (provided, however, that, for
the purposes of this clause (A), any shares of common stock or voting
securities of such resulting corporation received by such beneficial
owners in such Business Combination other than as the result of such
beneficial owners' ownership of Outstanding BankAmerica Common Stock
or Outstanding BankAmerica Voting Securities immediately prior to such
Business Combination shall not be considered to be owned by such
beneficial owners for the purposes of calculating their percentage of
ownership of the outstanding common stock and voting power of the
2
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resulting corporation), (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan
(or related trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or
the combined voting power of the then outstanding voting securities of
such corporation unless such Person owned 20% or more of the
Outstanding BankAmerica Common Stock or Outstanding BankAmerica Voting
Securities immediately prior to the Business Combination and (C) at
least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(d) Committee means the Executive Personnel and Compensation
Committee of the Board.
(e) Common Stock means shares of BankAmerica's common stock, $1.5625
par value per share.
(f) Company means BankAmerica and its Subsidiaries, collectively.
(g) Dividend Equivalent Credit ("DEC") and Dividend Equivalent Credit
Account ("DEC Account") have the meanings set forth in Section 3.5.
(h) The Fair Market Value of a share of Common Stock on any date
means the average of the high and low sales prices of a share of Common
Stock as reflected in the report of consolidated trading of New York Stock
Exchange listed securities for that day (or, if no shares were publicly
traded on that day, the immediately preceding day that shares were so
traded) published in The Wall Street Journal or in any other publication
selected by the Committee; provided, however, that if shares of Common
Stock shall not have been publicly traded for more than ten days
immediately preceding such date, then the fair market value of a share of
Common Stock shall be determined by the Committee in such manner as it may
deem appropriate.
(i) Option means an option to purchase shares of the Common Stock,
and shall be one of three kinds: (i) Incentive Stock Options ("ISOs") and
(ii) Non-Qualified Stock Option ("NQSOs"), granted pursuant to Article II;
and (iii) Performance Stock Options ("PSOs") granted pursuant to Article
III. The Company intends the ISOs shall meet the requirements of Section
422A of the Internal Revenue Code and the regulations thereunder applicable
to incentive stock options, and that NQSOs and PSOs shall not meet such
requirements.
3
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(j) Optionee means the holder of an Option.
(k) Restricted Stock means Common Stock issued or delivered pursuant
to Article V, the Restricted Stock Plan, with the restrictions set forth in
Sections 5.3 and 5.4.
(l) Retirement (including Early Retirement) means the last day of
employment with the Company prior to the employee's retirement under a
Company retirement program.
(m) Stock Appreciation Right ("SAR") has the meaning set forth in
Section 4.1.
(n) Stock Option Agreement means any written agreement between
BankAmerica and an employee of the Company pursuant to which an Option is
granted. The Committee shall determine the terms of each Stock Option
Agreement subject to the provisions of Section 2.2 with respect to ISOs and
NQSOs, and to the provisions of Section 3.2 with respect to PSOs.
(o) Subsidiary means any corporation of which BankAmerica owns,
directly or indirectly, twenty percent or more of the voting stock.
(p) Window Period means the time period described in section 4.5(a)
hereof.
(q) Section 16 means Section 16 of the Securities Exchange Act of
1934 and the rules thereunder.
1.4 Administration of Plan. (a) The Plan shall be administered by the
Committee. The Committee shall consist of at least three members of the Board,
none of whom shall be, while serving on the Committee, eligible to receive a
grant or award under the Plan or under any other plan of the Company or its
affiliates under which the participants are entitled to acquire Common Stock,
stock options, restricted stock, and related rights, or stock appreciation
rights of the Company or any of its affiliates. Members of the Committee shall
serve at the pleasure of the Board.
(b) Subject to the provisions of the Plan, the Committee shall have sole,
final, and conclusive authority to determine:
(i) The employees to whom Options, Restricted Stock, and related
rights, shall be granted or awarded;
(ii) The number of shares of Common Stock to be optioned, granted or
awarded to each such employee;
(iii) Whether and to what extent an Optionee may use already-owned
shares of Common Stock to exercise Options;
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(iv) The restrictions to be imposed on each share of Restricted
Stock awarded pursuant to Article V of this Plan, which shall not be less
than the minimum restrictions set forth in Section 5.3;
(v) Which Options granted shall be Incentive Stock Options, which
shall be Non-Qualified Stock Options, and which shall be Performance Stock
Options ;
(vi) The price to be paid for the shares upon the exercise of each
Option, which shall be not less than 100% of the Fair Market Value per
share, as determined by the Committee, of the Common Stock at the time of
granting the Option;
(vii) The period within which each Option shall be exercised;
(viii) The terms and conditions of each Stock Option Agreement
between BankAmerica and an employee to whom the Committee has granted an
Option, which, however, shall be in accordance with the provisions of the
Plan; and
(ix) The Committee shall have the power, authority, and sole
discretion to construe. interpret and administer the Plan. The Committee's
decisions construing, interpreting and administering the Plan shall be
conclusive and binding on all parties.
1.5 Eligibility to Receive Grants and Awards. Employees of BankAmerica or
of any of its Subsidiaries who shall, in the judgment of the Committee, be
qualified by position, training or ability to contribute substantially to the
progress of BankAmerica, shall be eligible to receive grants and awards under
the Plan.
1.6 Types of Grants and Awards Under Plan. Grants and awards under the
Plan may be in the form of any one or more of the following: (i) Incentive Stock
Options, (ii) Non-Qualified Stock Options, (iii) Performance Stock Options, (iv)
Stock Appreciation Rights, and (v) Restricted Stock.
1.7 Limitation on Available Shares. The maximum number of shares of
Common Stock that shall be available for issuance or delivery under the Plan and
BankAmerica Corporation Stock Option Plan B, with respect to grants and awards
made under the Plan on or after December 6, 1982, shall be 5,000,000. The
number of shares available under the Plan may be, in whole or in part,
authorized but unissued shares of Common Stock of BAC or issued shares of Common
Stock of BAC that have been reacquired by BAC. Shares of Common Stock shall be
issued or delivered upon the exercise of Options and may be issued or delivered
in payment of Dividend Equivalent Credits, Stock Appreciation Rights, and
Restricted Stock awards in the discretion of the Committee.
Any shares of Common Stock subject to an Option that for any reason is
cancelled (including shares subject to an Option which is cancelled upon the
exercise of related
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SARs) or terminated without having been exercised, or which expires, shall again
be available for issuance or delivery under the Plan.
Any shares of Restricted Stock that for any reason are reacquired by BAC
pursuant to Section 5.4, 5.5 or 5.6, shall again be available for delivery under
the Plan.
1.8 Effective Date and Term of Plan. (a) The Plan shall become effective
on December 6, 1982 and the Committee may, in its discretion, make grants and
awards to eligible key officers and other employees of the Company as of that
date, subject, however, to the approval of the Plan by the shareholders of
BankAmerica at the 1983 annual meeting of shareholders. In the event the Plan
is not approved at such meeting, the Plan and all grants and awards hereunder
shall be void, and the Company shall have no obligation to any recipients of
such grants and awards.
(b) The Committee may make grants and awards under the Plan beginning
December 6,1982 and during each subsequent year until such time as the Plan may
be terminated by the Board in its sole discretion, or as hereinafter provided.
(c) Unless the shareholders of BankAmerica shall approve an extension or
renewal of the Plan for such new or additional term as they may determine, no
grants and awards shall be made after December 5, 1992. However, all grants and
awards made under the Plan prior to such date shall remain in effect until such
grants and awards shall have been satisfied, terminated, or paid out, or expire,
in accordance with the Plan and the terms of such grants and awards.
ARTICLE II
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS
2.1 Grant of Stock Options. The Committee may, from time to time and
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, grant to any eligible employee Incentive Stock Options
("ISOs" or "Options") and/or Non-Qualified Stock Options ("NQSOs" or "Options")
(as these terms are defined in Section 1.3), to purchase, for cash and/or for
already-owned shares of Common Stock, such number of shares of Common Stock as
the Committee shall determine.
2.2 Stock Option Agreements. The grant of an ISO or NQSO shall be
evidenced by a written Stock Option Agreement in such form as the Committee may
from time to time determine in accordance with the provisions of the Plan,
executed by BankAmerica and the Optionee. Each Stock Option Agreement shall
state the number of shares of Common Stock subject to the Option, the Option
price, the Option Period, any limitations on the Option, the restrictions on
assigning and transferring the Option described in Section 6.8, the manner of
payment for shares of Common Stock, and such other terms as the Committee shall
determine.
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2.3 Option Price. The purchase price per share of Common Stock which the
Optionee must deliver upon the exercise of an ISO or NQSO shall be fixed by the
Committee, but shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date the Option is granted.
2.4 Option Period. Each Option granted as an ISO or NQSO shall become
exercisable in part or in full at such time or times as the Committee may
determine and specify in each Stock Option Agreement, subject to the limitations
set forth in Section 2.5; provided, however, that: no Option will be exercisable
before the date one year after the date the Option was granted, nor after the
first to occur of the following dates:
(a) ten years after the date the Option is granted;
(b) in the case of ISOs, three months after the date of the
Optionee's retirement; provided, however, that the Committee in its sole
discretion may extend the exercisability of any exercisable ISO held by an
Optionee who is not subject to Section 16 for up to twelve months following
the Optionee's retirement;
(c) in the case of NQSOs three years after the date of the Optionee's
retirement;
(d) twelve months after permanent disability or death of the
Optionee; and
(e) except as provided in Sections 2.4(a) through 2.4(d) above,
termination of the Optionee's employment with the Company, unless the
Committee, in its sole discretion, decides otherwise, in which case the
Committee shall have discretion with respect to any Option held by an
Optionee who is not subject to Section 16 to extend the exercisability of
any exercisable Option beyond the termination of the Optionee's employment.
2.5 Limitation on ISOs. No ISO shall be exercisable while there is
outstanding any incentive stock option previously granted to the Optionee to
purchase Common Stock or stock in a corporation which (at the time of granting
of the ISO) is a Subsidiary of BankAmerica, or is a predecessor corporation of
any such corporation, which incentive stock option was granted prior to the
grant of the ISO. For purposes of this Section, an incentive stock option is
"outstanding'' until it has been exercised in full or until its option period
has expired by reason of lapse of time. No Optionee shall be granted, in any
one calendar year under this Plan and under all plans of BankAmerica and its
Subsidiaries, incentive stock options covering stock which has an aggregate Fair
Market Value (determined as of the time the incentive stock options are granted)
in excess of $100,000 plus any "unused limit carryover" to such year, as
described below. If the value of shares subject to incentive stock options
granted to an Optionee in any calendar year under the Plan and all plans of
BankAmerica and its Subsidiaries is less than $100,000, one-half of the
difference between the amount of such grant and $100,000 may be carried forward
as an "unused limit carryover" and be available for grant during each of the
next three calendar years. The amount of the unused limit carryover from any
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calendar year which may be taken into account in a succeeding calendar year
shall be the amount of such carryover, reduced by the amount of such carryover
which was used in prior calendar years.
ISOs granted in any calendar year shall be treated as using up first the
$100,000 current year limitation and then the unused limit carryover from the
earliest calendar year, as illustrated in the following example: If the Company
wishes to grant ISOs in 1986, the grant will first be set off against the
$100,000 limitation for 1986, and then against unused limit carryovers from the
following calendar years in the order given:
(1) 1983
(2) 1984
(3) 1985
No ISO shall be granted to any person who at the time owns stock possessing
more than ten percent of the total combined voting power of all classes of stock
of BankAmerica and its Subsidiaries.
2.6 Manner of Paying Option Price. On exercise of each ISO or NQSO, the
Option Price shall be paid as follows: (a) in cash, (b) in already-owned shares
of Common Stock, or (c) in some combination of cash and shares, as specified in
the Stock Option Agreement or as otherwise permitted by the Committee. Already-
owned shares of Common Stock must have been owned by the Optionee at the time of
exercise for at least the period of time specified in the Stock Option
Agreement, and shall be valued at their Fair Market Value on the date of
exercise.
2.7 Exercise of Option. The Committee shall establish, and shall set
forth in each Stock Option Agreement, the procedures governing the exercise of
an ISO or NQSO. In general, subject to such specific provisions, an ISO or NQSO
shall be exercised as follows:
(a) The Optionee shall deliver written notice that he or she intends
to exercise the Option to the Company department or officer designated in
the Stock Option Agreement.
(b) The Optionee shall pay the full Option Price at the time of
exercise, according to Section 2.6 above.
(c) As soon as practicable after receipt of such notice and payment,
the Company shall deliver to the Optionee a certificate or certificates
evidencing the shares of Common Stock issued or delivered on exercise of
the Option.
2.8 Cancellation of SARs. The exercise of an ISO or NQSO with respect to
a share of Common Stock shall cancel any SAR related to such share.
2.9 Cancellation and Regrant of Non-Qualified Stock Options. With the
consent of the Optionee of a NQSO, the Committee in its sole discretion may
cancel
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particular NQSOs, and regrant to the same Optionee NQSOs to purchase the same or
a different number of shares of Common Stock. The Committee shall regrant NQSOs
on such terms as it may determine in its sole discretion, provided that the
Option Price shall be not less than the Fair Market Value of the Common Stock on
the date of regrant.
2.10 Retirement of Optionee at Age Sixty-Five or Later. Upon retirement at
age sixty-five or later, the Optionee shall become immediately entitled to
purchase all shares of Common Stock covered by the Option without regard to
whether the Option was fully exercisable at the retirement date under the terms
of the Plan and the Stock Option Agreement. The Optionee may purchase any or
all of the shares he or she is entitled to purchase at any time or times up to
and including the first to occur of the following dates:
(a) the end of the Option Period as provided in Section 2.4 above;
(b) in the case of ISOs, three months after the date of the
Optionee's retirement; provided, however, that the Committee in its sole
discretion may extend the exercisability of any ISO held by an Optionee who
is not subject to Section 16 for up to twelve months following the
Optionee's retirement; and
(c) in the case of NQSOs, three years after the date of the
Optionee's retirement.
2.11 Early Retirement of Optionee. Upon retirement prior to age sixty-
five, the Optionee may
(a) exercise any Option to the extent such Option was exercisable on
the retirement date; or
(b) within the sole discretion of the Committee, become immediately
entitled to purchase all shares of Common Stock covered by the Option
without regard to whether the ISO or NQSO was fully exercisable at the
retirement date under the terms of the Plan and the Stock Option Agreement.
The Optionee may purchase any or all of the shares he or she is entitled to
purchase at any time or times up to and including the first to occur of the
following dates:
(a) the end of the Option Period as provided in Section 2.4 above;
(b) in the case of ISOs, three months after the date of the
Optionee's retirement; provided, however, that the Committee in its sole
discretion may extend the exercisability of any exercisable ISO held by an
Optionee who is not subject to Section 16 for up to twelve months following
the Optionee's retirement; and
(c) in the case of NQSOs, three years after the date of the
Optionee's early retirement.
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2.12 Termination on Leave of Absence or Extraordinary Circumstances. Upon
termination of the Optionee's employment with the Company by reason of (a) leave
of absence treated as termination of employment pursuant to Section 6.3 or (b)
extraordinary circumstances, as determined in the sole discretion of the
Committee, then the Optionee may exercise any ISO or NQSO to the extent such
Option was exercisable on the date of termination of employment at any time or
times up to and including the first to occur of the following dates:
(i) the end of the Option Period as provided in Section 2.4 above;
and
(ii) three months after the date of the Optionee's termination.
2.13 Termination of Employment of Optionee. With respect to Optionees who
were employed by the Company on the date of grant, except as provided in Section
2.4(e), 2.10, 2.11, 2.12 and 2.14, all ISOs and NQSOs shall become non-
exercisable upon termination of the Optionee's employment with the Company.
Termination of any Optionee's employment with the Company shall be deemed to
include a change in Ownership of the Optionee's employer such that the
Optionee's employer ceases to be BankAmerica or one of its Subsidiaries,
PROVIDED, HOWEVER, that at any time within thirty (30) days prior to such a
change in ownership, or within ninety (90) days after termination of the
Optionees employment with the Company, within the sole discretion of the
Committee, the optionee may become immediately entitled to purchase all shares
of Common Stock covered by the Option without regard to whether the Option would
be fully exercisable at the termination date under the terms of the Plan and the
Stock Option Agreement.
2.14 Disability or Death of Optionee. If an Optionee entitled to exercise
an ISO or NQSO
(a) terminates employment with the Company by reason of (i) permanent
disability, as determined by the Committee, or (ii) death, or
(b) is permanently disabled or dies after termination of employment
with the Company and during the Option Period,
(A) the Optionee, (B) the Optionee's estate, and/or (C) a person who
acquires the right to exercise such Option by bequest or inheritance, may
(a) exercise such Option to the extent of the number of shares of
Common Stock which could have been purchased by the Optionee on the date of
disability or death; or
(b) within the sole discretion of the Committee, become immediately
entitled to purchase all shares of Common Stock covered by the Option
without regard to whether the Option was fully exercisable at the date of
disability or death under the terms of the Plan and the Stock Option
Agreement,
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at any time or times up to and including the first to occur of the following
dates:
(a) the end of the Option Period as provided in Section 2.4 above;
and
(b) twelve months following the date of the Optionee's disability or
death.
ARTICLE III
PERFORMANCE STOCK OPTIONS
3.1 Grant of Performance Stock Options. The Committee may, from time to
time and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any eligible employee
Performance Stock Options ("PSOs" or "Options") (as these terms are defined in
Section 1.3) to purchase, for cash and/or for already-owned shares of Common
Stock, such number of shares of Common Stock as the Committee shall determine.
3.2 Stock Option Agreements. The grant of a PSO shall be evidenced by a
written Stock Option Agreement in such form as the Committee may from time to
time determine in accordance with the provisions of the Plan, executed by
BankAmerica and the Optionee. Each Stock Option Agreement shall state the
number of shares of Common Stock subject to the Option, the Option Price, the
Option Period, any limitations on the Option, the restrictions on assigning and
transferring the Option described in Section 6.8, the manner of payment for
shares of Common Stock, and such other terms as the Committee shall determine.
3.3 Option Price. The purchase price per share of Common Stock which the
Optionee must deliver upon the exercise of a PSO shall be fixed by the
Committee, but shall not be less than 100% of the Fair Market Value of a share
of Common Stock on the date the Option is granted.
3.4 Option Period. Each Option granted as a PSO shall become exercisable
in part or in full at such time or times as the Committee may determine and
specify in each Stock Option Agreement; PROVIDED, HOWEVER, that no PSO will be
exercisable before the date one year after the date the Option was granted, nor
after the first to occur of the following dates:
(a) ten years, after the date the Option is granted;
(b) three years after the date of the Optionee's retirement;
(c) twelve months after permanent disability or death of the
Optionee; and
(d) except as provided in Sections 3.4(a) through 3.4(c) above,
termination of the Optionee's employment with the Company, unless the
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Committee, in its sole discretion, decides otherwise, in which case the
Committee shall have discretion with respect to any Option held by an
Optionee who is not subject to Section 16 to extend the exercisability of
any exercisable Option beyond the termination of the Optionee's employment.
3.5 Dividend Equivalent Credit. A Dividend Equivalent Credit ("DEC") is
the amount credited to the account of an Optionee (the "DEC Account") equal to a
percentage designated by the Committee in each Stock Option Agreement, of the
dividends per share paid by BankAmerica on its Common Stock. The Committee
shall maintain one DEC Account with respect to each outstanding Stock Option
Agreement for PSOs. Amounts credited to the DEC Account shall be measured in
terms of shares of Common Stock (the "Share Equivalents''), although the DEC
Accounts shall be wholly unfunded until the amounts credited are paid out
pursuant to Sections 3.8, 3.9 and 3.10 below.
DECs shall be credited as of any date on which BankAmerica pays dividends
on its Common Stock. DECs shall be credited in the form of the number of Share
Equivalents equal to
(a) the product of (i) the number of shares with respect to which a
DEC is being credited pursuant to Section 3.6 below, multiplied by (ii) the
dollar amount of the dividends per share paid on that date, all multiplied
by (iii) the percentage specified in the Stock Option Agreement
DIVIDED BY
(b) the Fair Market Value of one share of Common Stock on the date
the related dividends are paid.
Except as provided in Section 3.12, the balance in any DEC Account shall be
reduced to zero upon cancellation of the related PSO(s).
3.6 Granting of Dividend Equivalent Credit. The Committee shall, subject
to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, grant the Optionee one DEC with respect to (a) each
share of Common Stock subject to a PSO outstanding and unexercised as of the
record date for the related dividend whether or not such PSO is then exercisable
under the Plan and the Stock Option Agreement, and (b) each Share Equivalent
previously credited to the Optionee's DEC Account, as those terms are defined in
Section 3.5. However, after the Optionee ceases to be an employee of the
Company, no portion of any dividend paid by BankAmerica on its Common Stock
shall be credited to the Optionee's DEC Account(s).
3.7 Manner of Paying Option Price. On exercise of each PSO, the Option
Price shall be paid as follows: (a) in cash, (b) in already-owned shares of
Common Stock, or (c) in some combination of cash and shares, as specified in the
Stock Option Agreement or as otherwise permitted by the Committee. Already-
owned shares of Common Stock must have been owned by the Optionee at the time of
exercise for at least
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the period of time specified in the Stock Option Agreement, and shall be valued
at their Fair Market Value on the date of exercise.
3.8 Exercise of Options. The Committee shall establish, and shall set
forth in each Stock Option Agreement, the procedures governing the exercise of a
PSO. In general, subject to such specific provisions, a PSO shall be exercised
as follows:
(a) The Optionee shall deliver written notice that he or she intends
to exercise the Option to the Company department or officer designated in
the Stock Option Agreement.
(b) The Optionee shall pay the full Option Price at the time of
exercise, according to Section 3.7 above.
(c) As soon as practicable after receipt of such notice and payment,
the Company shall deliver to the Optionee
(i) a certificate or certificates evidencing the shares of
Common Stock issued or delivered on exercise of the Option, together
with
(ii) all or that portion of the related DEC Account which
equals (A) the total DEC Account, multiplied by (B) the quotient of
-------------
(1) the number of PSOs being exercised, divided by (2) the total
number of PSOs then outstanding under the Stock Option Agreement,
all payable according to Section 3.10 below.
3.9 Surrender of Performance Stock Options. Pursuant to the terms of the
Stock Option Agreement, at any time when (a) the Option Price of a PSO exceeds
the Fair Market Value of the Common Stock and (b) all PSOs granted pursuant to
the same Stock Option Agreement are fully exercisable, the Optionee may
surrender all but not less than all of his or her PSOs on written notice to the
Company, without payment of the Option Price. As soon as practicable after
receipt of such notice, the Company shall deliver to the Optionee the greater of
the following:
(a) the "Net Underwater Amount," equal to (i) the total DEC Account
reduced by (ii) the difference between (A) the aggregate Option Price of
----------
the PSOs surrendered, and (B) the aggregate Fair Market Value on the date
of surrender of the Common Stock issuable or deliverable with respect to
the PSOs surrendered; and
(b) a percentage, determined by the Committee and specified in the
Stock Option Agreement, of the related DEC Account,
PROVIDED, HOWEVER, that if the Optionee gives notice on or before the day
preceding the last day of the Option Period of the Optionee's intention to
surrender all outstanding PSOs as of the end of the Option Period, the Net
Underwater Amount shall
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be equal to (i) the total DEC Account reduced by (ii) the difference between (A)
----------
the aggregate Option Price of the PSOs surrendered, and (B) the average
aggregate Fair Market Value (the "Average Annual Fair Market Value"), of the
Common Stock issuable or deliverable with respect to the PSOs surrendered for
all trading days during the period of 365 consecutive days ending on the last
day of the Option Period. If the Average Annual Fair Market Value exceeds the
aggregate Option Price, then the Optionee shall receive the entire DEC Account.
In all cases, payments of the DEC Accounts shall be made according to
Section 3.10 below.
3.10 Payments from the DEC Account. Amounts payable to the Optionee from
his or her DEC Account upon exercise of PSOs or the related SARs or surrender of
PSOs may be paid either (a) in shares of Common Stock; (b) in cash; or (c) in
some combination of shares and cash, as determined by the Committee and stated
in the Stock Option Agreement, PROVIDED THAT at any time when the Option
constitutes Stock Appreciation Rights pursuant to Article IV of the Plan, (i) if
the Optionee exercises the SR or surrenders the related PSO during the Window
Period described in Section 4.5(a), the DEC Account shall be paid out in cash
and valued as provided in Section 4.5(b), and (ii) if the Optionee exercises the
SAR or surrenders the related PSO at any time outside that Window Period, the
DEC Account shall be paid out in shares of Common Stock and valued as provided
in Section 4.5 (c).
3.11 Cancellation of SARs. The exercise of a PSO with respect to a share
of Common Stock shall cancel any SAR related to such share.
3.12 Cancellation and Regrant of Performance Stock Options. With the
consent of the holder of a Performance Stock Option, the Committee in its sole
discretion may cancel particular PSOs, and regrant to the same Optionee PSOs to
purchase the same or a different number of shares of Common Stock. The
Committee shall regrant PSOs on such terms as it may determine in its sole
discretion, provided (a) that the Option Price shall not be less than the Fair
Market Value of the Common Stock on the date of regrant, and (b) that the DEC
Account shall not thereby become payable in whole or in part to the Optionee.
The Committee may, in its sole discretion, provide that some or all of the DEC
Account maintained with respect to the PSOs cancelled may be immediately
credited to the PSOs which are regranted.
3.13 Retirement of Optionee at Age Sixty-Five or Later. Upon retirement at
age sixty-five or later, the Optionee shall become immediately entitled to
purchase all shares of Common Stock covered by the PSO without regard to whether
the Option was fully exercisable at the retirement date under the terms of the
Plan and the Stock Option Agreement. The Optionee may purchase any or all of the
shares he or she is entitled to purchase at any time or times up to and
including the first to occur of the following dates:
(a) the end of the Option Period as provided in Section 3.4 above;
and
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(b) three years after the date of the Optionee-s retirement.
3.14 Early Retirement of Optionee. Upon early retirement prior to age
sixty-five, the Optionee may
(a) exercise any Option to the extent such Option was exercisable on
the retirement date; or
(b) within the sole discretion of the Committee, become immediately
entitled to purchase all shares of Common Stock covered by the Option
without regard to whether the PSO was fully exercisable at the retirement
date under the terms of the Plan and the Stock Option Agreement.
The Optionee may purchase any or all of the shares he or she is entitled to
purchase at any time or times up to and including the first to occur of the
following dates:
(a) the end of the Option Period as provided in Section 3.4 above;
and
(b) three years after the date of the Optionee's early retirement.
3.15 Termination on Leave of Absence or Extraordinary Circumstances. Upon
termination of the Optionee's employment with the Company by reason of (a) leave
of absence treated as termination of employment pursuant to Section 6.3 or (b)
extraordinary circumstances, as determined in the sole discretion of the
Committee, the Optionee may exercise any Option to the extent such Option was
exercisable on the date of termination of employment at any time or times up to
and including the first to occur of the following dates:
(a) the end of the Option Period as provided in Section 3.4 above;
and
(b) three months after the date of the Optionee's termination.
3.16 Termination of Employment of Optionee. With respect to Optionees who
were employed by the Company at the date of grant, except as provided in Section
3.4(d), 3.13, 3.14, 3.15 and 3.17, all Options shall become non-exercisable upon
termination of the Optionee's employment with the Company. Termination of an
Optionee's employment with the Company shall be deemed to include a change in
ownership of the Optionee's employer such that the Optionee's employer ceases to
be BankAmerica or one of its Subsidiaries, PROVIDED, HOWEVER, that at any time
within thirty (30) days prior to such a change in ownership or within ninety
(90) days after termination of the Optionee's employment with the Company,
within the sole discretion of the Committee, the Optionee may become immediately
entitled to purchase all shares of Common Stock covered by the Option without
regard to whether the Option would be fully exercisable at the termination date
under the terms of the Plan and the Stock Option Agreement.
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3.17 Disability or Death of Optionee. If an Optionee entitled to exercise
a PSO
(a) terminates employment with the Company by reason of (i) permanent
disability, as determined by the Committee, or (ii) death, or
(b) is permanently disabled or dies after termination of employment
with the Company and during the Option Period,
(A) the Optionee, (B) the Optionee's estate, and/or (C) a person who acquires
the right to exercise such Option by bequest or inheritance, may
(a) exercise such Option to the extent of the number of shares of
Common Stock which could have been purchased by the Optionee on the date of
disability or death; or
(b) within the sole discretion of the Committee, become immediately
entitled to purchase all shares of Common Stock covered by the Option
without regard to whether the Option was fully exercisable at the date of
disability or death under the terms of the Plan and the Stock Option
Agreement.
at any time or times up to and including the first to occur of the following
dates:
(a) the end of the Option Period as provided in Section 3.4 above;
and
(b) twelve months following the date of the Optionee s disability or
death.
ARTICLE IV
STOCK APPRECIATION RIGHTS
4.1 Grant of Stock Appreciation Rights. Each Option granted under the
Plan shall also constitute Stock Appreciation Rights ("SARs") at any time while
the Optionee is, or was within the preceding six months, an "officer" or
"director" of BankAmerica, as such terms are defined in Section 16 ("Section
16") of the Exchange Act, and the rules of the Securities and Exchange
Commission thereunder.
Except as provided in Section 4.5(c) below, an SAR shall represent the
right to receive payment (the "SAR Value") equal to the amount, if any, by which
(a) the Fair Market Value of one share of Common Stock on the date of exercise
of the SAR exceeds (b) the Option Price of one share of Common Stock which is
subject to the SAR's related Option.
The Committee shall not grant an SAR with respect to an ISO unless,
pursuant to applicable law and rules and regulations of the Internal Revenue
Service, the SAR may be
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attached to the ISO without causing the ISO to fail to meet the requirements of
Section 422A of the Internal Revenue Code.
4.2 Agreements Evidencing SARs. SARs granted under the Plan shall be
included in the written Stock Option Agreement between BankAmerica and the
Optionee.
4.3 Exercise of SARs. An Optionee who has been granted SARs may, from
time to time, elect to exercise one or more SARs and thereby become entitled to
receive payment in the amount and from and within the time determined pursuant
to Sections 2.4 and 3.4. An SAR shall be exercisable only to the same extent
and subject to the same conditions as the Option related thereto is exercisable.
The Committee may, in its discretion, prescribe additional conditions on the
exercise of any SAR.
4.4 Amount of Payment. Upon the exercise of each SAR, the Optionee shall
be entitled to receive
(a) payment of the amount represented by the SAR, together with
(b) all or that portion of the DEC Account which equals the product
of (i) the total DEC Account, multiplied by (ii) the quotient of (A) the
number SARs being exercised, divided by (B) the total number of related
PSOs then outstanding under the related Option.
4.5 Form and Timing of Payment. (a) Exercise of SARs for Cash or Common
Stock. SARs exercised during the Window Period described below shall be payable
only in cash, and SARs exercised outside the Window Period shall be payable only
in shares of Common Stock. A ''Window Period" is a period (i) beginning on the
third business day following the date of public release of BankAmerica's
quarterly and annual summary statements of revenues and earnings and (ii) ending
on the twelfth business day following such date.
(b) Amount of Cash Payable on Exercise of SARs. When SARs are exercised
during the Window Period, the Optionee shall receive a cash amount equal to (i)
the number of SARs exercised multiplied by (ii) the difference between (A) the
highest Fair Market Value of one share of Common Stock as of any day during the
Window Period, and (B) the Option Price specified for the related Option.
(c) Number of Shares Issuable or Deliverable on Exercise of SARs. When
SARs are exercised outside the Window Period, the Optionee shall receive the
number of whole shares of Common Stock equal to (i) the aggregate SAR Value (as
defined in Section 4.1) of the SARs exercised divided by (ii) the Fair Market
----------
Value (as defined in Section 1.3) on the date of exercise. The Company shall
deliver cash in lieu of fractional shares.
4.6 Cancellation of Related Options. The exercise of an SAR shall cancel
any NQSO or PSO to which it relates, to the extent of the exercise. Any
exercise of an SAR with respect to an ISO must be made in accordance with
Section 4.1.
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4.7 Termination of Employment of Optionee. Except as provided in Section
4.8 below, in the event that the holder of an SAR ceases to be employed with the
Company for any reason, his or her SAR shall be exercisable only to the same
extent and upon the same conditions that the Option related thereto is
exercisable only until the sooner of (a) six months after the date he or she
ceases to be an officer or director as defined in Section 16, and (b) the end of
the Option Period of the related Options.
4.8 Death of Optionee. In the event that the holder of an SAR dies, his
or her SAR shall terminate, and only the related Option shall be exercisable,
pursuant to Sections 2.14 and 3.17.
ARTICLE V
RESTRICTED STOCK PLAN
5.1 Introduction. This Restricted Stock Plan amends and restates the
BankAmerica Corporation Restricted Stock Bonus Plan (the "Bonus Plan").
However, restricted stock already granted under the Bonus Plan will continue to
be held under the terms of the Bonus Plan. Only grants of Restricted Stock made
on or after the effective date of this new Plan shall be governed by the terms
of this Article V.
5.2 Award of Restricted Stock. The Company may, from time to time and
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, award shares of Common Stock to be held under the
restrictions set forth in Sections 5.3 and 5.4 below to any eligible employee
who has served as such for at least six months. BankAmerica shall issue or
deliver shares of registered Restricted Stock awarded hereunder in the name of
the employee concerned (the "Restricted Stockholder").
5.3 Minimum Restrictions on Disposition of Stock Awards. The Restricted
Stockholder may not, under any circumstances, voluntarily dispose of any of the
Restricted Stock prior to the first to occur of the following events:
(a) the date on which the Restricted Stockholder completes five years
of continuous service for the Company following the award date;
(b) the Restricted Stockholder's retirement;
(c) delivery of the Restricted Stock to the Restricted Stockholder
following a Committee determination pursuant to Section 6.6 hereof in
connection with a Change in Control:
(d) the Restricted Stockholder's death: or
(e) delivery of the Restricted Stock to the Restricted Stockholder
following his or her termination of employment prior to retirement or
death.
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The limitations in this Section 5.3 will hereinafter be referred to as the
"minimum restrictions."
5.4 Optional Restrictions. In addition to the minimum restrictions, the
Committee may impose additional restrictions ("optional restrictions") upon the
Restricted Stockholder's voluntary disposition and release from escrow of the
Restricted Stock, either at the time the Committee makes an award of such
Restricted Stock or at any subsequent time before the minimum restrictions
expire. The Committee may impose optional restrictions (such as, without
limitation, permitting such disposition and release only in installments over a
period of years) as it may deem in the best interests of the Restricted
Stockholder, or in the case of the Restricted Stockholder's death, of the heirs
or legatees who become entitled to such Restricted Stock by the applicable laws
of inheritance or under the terms of the Restricted Stockholder's will.
5.5 Termination of Employment of Restricted Stockholder for Gross
Misconduct. If a Restricted Stockholder's services are terminated for cause for
gross misconduct, all shares awarded to any Restricted Stockholder under this
Plan shall be forfeited, and the Committee shall direct such shares to be
transferred and delivered to BankAmerica. Gross misconduct includes, but is not
limited to, acts of dishonesty, such as theft, embezzlement, and falsification
of the Company's records with intent to deceive; knowing violation of the
BankAmerica Corporation Code of Corporate Conduct and similar codes or rules
established by BankAmerica; and any crime constituting a felony.
5.6 Termination of Employment of Restricted Stockholder not Involving
Gross Misconduct.
(a) Should a Restricted Stockholder who was employed by the Company on the
date of grant terminate his or her employment with the Company prior to (i) the
date on which he or she completes the period of continuous service for the
Company following the award date specified by the Committee for such award, or
(ii) his or her death or retirement; or
(b) should the Company terminate his or her services for any reason other
than for a cause set forth in Section 5.5 above.
BankAmerica shall have the right to reacquire all or any part of the Restricted
Stock, as determined by the Committee in its sole discretion, without the
payment of consideration in any form to such Restricted Stockholder. If the
Committee determines to exercise this right, the Restricted Stockholder shall
unconditionally forfeit any right, title or interest to such Restricted Stock,
unless the Committee, within 90 days of such termination, determines in its sole
discretion to permit the Restricted Stockholder to retain all or any part of the
Restricted Stock. Upon direction of the Committee, all forfeited Restricted
Stock shall be transferred and delivered to BankAmerica. Termination of a
Restricted Stockholder's employment with the Company shall be deemed to include
a change in ownership of the Optionee's employer such that the restricted
stockholder's employer ceases to be BankAmerica or one of its Subsidiaries.
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5.7 Escrow. In order to administer the restrictions set forth in Sections
5.3, 5.4, 5.5 and 5.6 above, the certificates evidencing Restricted Stock,
although issued in the name of the Restricted Stockholder, shall be held by Bank
of America National Trust and Savings Association (the "Bank" in escrow subject
to delivery to the Restricted Stockholder or to BankAmerica at such times and in
such amounts as the Committee shall direct under the terms of this Plan. When
an employee accepts an award of Restricted Stock pursuant to the Plan, he or she
thereby grants an irrevocable power of attorney to the Bank to cause the
transfer and delivery to BankAmerica of any of such Restricted Stock which the
Committee shall direct to be so transferred and delivered pursuant to Sections
5.5 and 5.6 above.
5.8 Dividends on Restricted Stock. Even while the Restricted Stock is
held in escrow, all dividends BankAmerica pays on the Restricted Stock shall be
delivered directly to the Restricted Stockholder, not the escrow account.
5.9 Voting Rights. Even while the Restricted Stock is held in escrow, the
Restricted Stockholder shall have the same voting rights with respect to the
Restricted Stock as those provided to other shareholders of Common Stock.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or messenger, addressed
(a) if to the Company, at
Bank of America NT&SA
555 California Street
San Francisco, CA 94104
Attn: Executive Programs #3005
Corporate Personnel
(b) if to the Optionee, at the last address shown on the Company's
personnel records, or
(c) to such address as either the Company or the Optionee shall later
designate by notice to the other.
6.2 Amendments to Plan. The Board may, at any time and from time to time,
modify, amend, suspend or terminate the Plan in any respect. Notwithstanding
the above, however, any modification, amendment, suspension or termination of
the Plan shall not affect an Optionee's or Restricted Stockholder's rights to a
grant or award previously made, except as provided in Section 1.8(a), or except
with his or her consent.
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6.3 Leaves of Absence. The Committee shall be entitled to make such
rules, regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence from the Company taken by the recipient of any
grant or award under the Plan. Without limiting the generality of the
foregoing, the Committee shall be entitled to determine (a) whether or not any
such leave of absence shall be treated as a termination of employment with the
Company within the meaning of the Plan and (b) the impact, if any, of any such
leave of absence on grants and awards under the Plan.
6.4 Dilution and Other Adjustments. In the event of any change in the
outstanding Common Stock by reason of a stock dividend or stock split,
recapitalization, merger, consolidation, exchange of shares or other similar
corporate change, then the Committee may appropriately adjust the aggregate
number of shares of Common Stock which is available for issuance or delivery
under the Plan (as set forth in Section 1.7), the number of shares of Common
Stock subject to Options and SARs granted under the Plan, the number of Share
Equivalents credited to DEC Accounts pursuant to Section 3.5, the Option Price
of Options granted under the Plan, the number of shares of Restricted Stock held
in escrow pursuant to Section 5.7, and any and all other matters deemed
appropriate by the Committee.
6.5 General Restriction. Each grant and award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (a) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or federal law, (b) the consent or approval of any government regulatory body,
or (c) an agreement by the recipient of a grant or award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a condition
of, or in connection with, the making of a grant or award or the issue, delivery
or purchase of shares of Common Stock thereunder, then such grant or award shall
not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
6.6 Change in Control. If BankAmerica undergoes a Change in Control (as
defined in Section 1.3(c)), the following shall apply:
(a)(i) All outstanding Options and related SARs shall be immediately
exercisable in full; (ii) all DEC Accounts related to any PSOs shall be
paid in full as soon as practicable following the Change in Control; and
(iii) all Restricted Stock shall be immediately released free from all
restrictions and shall be delivered to the Restricted Stockholder as soon
as practicable following the Change in Control.
(b) Except as provided in the following sentence and in (c) below,
in the event an employee terminates employment with the Company following a
Change in Control, his or her Options and related SARs shall remain
exercisable for a period of three years following termination of
employment, not to exceed the original term of the Option or related SAR.
The preceding sentence shall not apply to an incentive stock option unless
the option agreement gives the Committee discretion to permit the incentive
stock option to
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remain exercisable following termination of the optionholder's employment,
in which case the incentive stock option shall be exercisable for three
months following termination of employment without further Committee
action.
(c) Subsection (b) shall not apply to permit Options and SARs to
remain exercisable for a period of more than three months following
termination of employment if such Options and SARs were granted to a person
who, at the time of the person's termination of employment, is an officer
or director of BankAmerica, as such terms are defined in Section 16 of the
Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder.
(d) The Company shall have the right to deduct from any settlement of
any Option, SAR or Restricted Stock an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to
take such other action as may be necessary to satisfy any such withholding
obligation.
6.7 Withholding Taxes. Whenever the Company proposes to deliver shares of
Common Stock under the Plan, the Company shall have the right to require the
individual who is to receive the shares to remit to the Company, prior to the
delivery of any certificate or certificates for such shares, an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements. Whenever, under the Plan, payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy any federal, state
and/or local withholding tax requirements.
6.8 Non-Assignability. No Optionee or Restricted Stockholder shall have
the right to alienate, assign, encumber, hypothecate or pledge his or her
interest in any award under the Plan, voluntarily or involuntarily, and any
attempt to so dispose of any such interest prior to payment thereof shall be
void. Notwithstanding the preceding sentence, the Company shall have the right
to offset from any unpaid or deferred award any amounts due and owing from the
Optionee or Restricted Stockholder to the extent permitted by law.
6.9 No Right to Employment. Nothing in the Plan nor in any agreement
entered into pursuant to the Plan shall confer upon any Optionee or Restricted
Stockholder the right to continue in the employment of the Company, nor affect
any right which the Company may have to terminate the employment of such person.
6.10 Rights as Shareholder. No Optionee shall have rights as a shareholder
with respect to shares of Common Stock awarded to him or her unless and until
the certificates for such shares are delivered to him or her. Restricted
Stockholders have full voting rights with respect to Restricted Stock, as
outlined in Section 5.9 hereof.
6.11 Entire Plan. This document is a complete statement of the Plan. As
of its effective date this document supersedes all prior plans, representations
and proposals, written or oral, relating to its subject matter, except as
otherwise provided in Sections 1.1 and 5.1 hereof. The Company shall not be
bound by or liable to any person for any
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representation, promise or inducement made by any employee or agent of it which
is not embodied in this document.
6.12 Governing Law. The Plan shall be construed and enforced in accordance
with California law.
The resolution amending Sections 1.3(c) and 6.6 provided that no
modification, suspension, amendment or termination of the Plan may be made which
would adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option, stock appreciation right, restricted
stock unit or other stock based award granted under the Plan prior to the date
of such modification, suspension, amendment or termination.
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EXHIBIT 10.d.
SECURITY PACIFIC CORPORATION
STOCK-BASED INCENTIVE AWARD PLAN
AS AMENDED
Last Amended August 7, 1995
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Board of Directors April 27, 1992
BankAmerica Corporation
RESOLUTION RE AMENDMENT OF STOCK AND STOCK-BASED AWARD PLANS
IN CONNECTION WITH THE MERGER OF
BANKAMERICA CORPORATION AND SECURITY PACIFIC CORPORATION
--------------------------------------------------------
The Board of Directors of BankAmerica Corporation ("BAC") authorizes
and determines:
1. As of April 22, 1992, the effective date of the merger of Security
Pacific Corporation ("SPC") into BAC (the "Merger"), SPC sponsored the following
plans (the "SPC Stock Plans") pursuant to which awards of stock and stock-based
incentives have been made:
Security Pacific Corporation Stock-Based Incentive Award Plan
Security Pacific Corporation Stock Option Plan
Management Incentive Stock Plan of Rainier Bancorporation
Security Pacific Corporation Performance Incentive Plan
2. Grants and awards have been made and are outstanding under the SPC
Stock Plans. BAC assumes the obligations of, and shall be successor to, SPC
under the SPC Stock Plans.
3. The SPC Stock Plans are amended as follows, effective April 22, 1992:
a. Except as provided in (b), below, and unless the context clearly
indicates otherwise, references to SPC shall become references to BAC and
references to Security Pacific National Bank shall become references to
Bank of America NT&SA.
b. The names of the SPC Stock Plans shall remain unchanged.
c. Unless the context clearly indicates otherwise, all references to
SPC Common Stock, par value $10.00, shall become references to BAC Common
Stock, par value $1.5625.
d. Only employees of SPC prior to the Merger are eligible to
participate in the SPC Stock Plans.
e. All references to the Executive Officers Compensation and
Development Committee of the Board of Directors of SPC and to the
"Committee" in the Rainier Bancorporation Management Incentive Stock Plan
shall become references to the Executive Personnel and Compensation
Committee of the Board of Directors of BAC, which is and shall be composed
solely of disinterested directors.
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4. BAC's Personnel Relations Officer is further authorized and directed
to take such action as she deems necessary and appropriate to implement the
provisions of the foregoing resolution.
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SECURITY PACIFIC CORPORATION
STOCK-BASED INCENTIVE AWARD PLAN
I. DEFINITIONS.
1.1 Definitions.
(a) "Act" shall mean the Securities Exchange Act of 1934.
(b) "Award" shall mean an Option, which may be designated as a
Nonqualified or Incentive Stock Option, a Stock Appreciation Right, a Restricted
Stock Award or a Performance Share Award, in each case granted under this Plan.
(c) "Award Agreement" shall mean a written agreement setting forth
the terms of an Award.
(d) "Award Date" shall mean the date upon which the Grantor took the
action granting an Award or such later date as is prescribed by the Grantor.
(e) "Award Period" shall mean the period beginning on an Award Date
and ending on the expiration date of such Award.
(f) "Beneficiary" shall mean the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive the benefits
specified under this Plan in the event of the Participant's death.
(g) "Board of Directors" shall mean the Board of Directors of the
Corporation, a majority of whom shall be Disinterested when taking action with
respect to this Plan.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(i) "Committee" shall mean the Executive Officers Compensation and
Development Committee of the Board of Directors as from time to time constituted
and any successor committee of the Board of Directors with similar functions and
shall consist of three or more members each of whom shall be Disinterested.
(j) "Common Stock" shall mean the Common Stock of the Corporation
($10.00 par value), subject to adjustment pursuant to Section 7.2.
(k) "Company" shall mean, collectively, the Corporation and its
Subsidiaries.
(l) "Corporation" shall mean Security Pacific Corporation and its
successors.
(m) "Disinterested" shall mean disinterested within the meaning of
applicable regulatory requirements, including those promulgated under Section 16
of the Act.
(n) "Eligible Employee" shall mean an officer or key employee of the
Company.
(o) "Event" shall mean any of the following:
(i) Approval by the stockholders of the Corporation of the
dissolution or liquidation of the Corporation;
(ii) Approval by the stockholders of the Corporation of an
agreement to merge or consolidate, or otherwise reorganize, with or
into one or more entities which are not Subsidiaries, as a result of
which less than 50% of the outstanding voting securities of the
surviving or resulting entity are, or are to be, owned by former
stockholders of the Corporation (excluding from the term "former
stockholders" a stockholder who is, or as a result of the transaction
in question becomes, an "affiliate", as that term is
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used in the Act and the Rules promulgated thereunder, of any party to
such merger, consolidation or reorganization):
(iii) Approval by the stockholders of the Corporation of the
sale of substantially all of the Corporation's business and/or assets
to a person or entity which is not a Subsidiary; or
(iv) A Change in Control, as from time to time defined in the
Corporation's By-Laws.
(p) "Fair Market Value" shall mean the closing price of the Common
Stock on the New York Stock Exchange as reported on the Composite Tape and
published in the Western Edition of The Wall Street Journal, or, if there is no
trading of the Common Stock on the date in question, then the closing price of
the Common Stock, as so reported and published, on the next preceding date on
which there was trading in the Common Stock.
(q) "Grantor" shall mean the Board of Directors and the Committee,
each in its capacity as grantor of Awards.
(r) "Incentive Stock Option" shall mean an incentive stock option
within the meaning of Section 422A of the Code, the award of which contains such
provisions as are necessary to comply with that section.
(s) "Nonqualified Stock Option" shall mean an option granted pursuant
to this Plan which does not qualify as an Incentive Stock Option.
(t) "Option" shall mean an option to purchase Common Stock under this
Plan. An option shall be designated by the Grantor as a Nonqualified Stock
Option or an Incentive Stock Option.
(u) "Participant" shall mean an Eligible Employee who has been
awarded an Award.
(v) "Performance Share Award" shall mean an award of shares of Common
Stock issuance of which is contingent upon attainment of performance objectives
specified by the Grantor.
(w) "Personal Representative" shall mean the person or persons who,
upon the disability or incompetence of a Participant, shall have acquired on
behalf of the Participant by legal proceeding or otherwise the right to receive
the benefits specified in this Plan.
(x) "Plan" means this Security Pacific Corporation Stock-Based
Incentive Award Plan.
(y) "Restricted Stock" shall mean those shares of Common Stock issued
pursuant to a Restricted Stock Award which are not free of the restrictions set
forth in the related Award Agreement.
(z) "Restricted Stock Award" shall mean an award of a fixed number of
shares of Common Stock to the Participant subject, however, to payment of such
consideration, if any, and such forfeiture provisions, as are set forth in the
Award Agreement.
(aa) "Retirement" shall mean retirement of an individual as an
employee of the Company at any time described in Sections 4.1 and 4.3 of the
Security Pacific Trusteed Retirement Income Plan or in any successor Section or
plan, in each case, as from time to time in effect.
(bb) "Stock Appreciation Right" shall mean a right to receive a number
of shares of Common Stock or an amount of cash, or a combination of shares and
cash, determined as provided in Section 4.3(a).
(cc) "Subsidiary" shall mean any corporation or other entity a
majority or more of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation.
(dd) "Total Disability" shall mean total disability as defined in
Article I of the Security Pacific Trusteed Retirement Income Plan or in any
successor provision or plan, as from time to time in effect.
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II. THE PLAN.
2.1 Purpose.
The purpose of this Plan is to promote the success of the Company by
providing an additional means to attract and retain key personnel through added
long term incentive for high levels of performance and for significant efforts
to improve the financial performance of the Company by granting Awards.
2.2 Administration.
This Plan shall be administered by the Committee. Action of the
Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or the written consent of all of its members. In the
event action by the Committee is taken by written consent of all of its members,
the action by the Committee shall be deemed to have been taken at the time
specified in the consent or. if none is specified, at the time of the last
signature. The Committee may delegate administrative functions to individuals
who are officers or employees of the Company.
Subject to the express provisions of this Plan, the Committee shall
have the authority to construe and interpret this Plan and any agreements
defining the rights and obligations of the Company and Participants under this
Plan, to further define the terms used in this Plan, to prescribe, amend and
rescind rules and regulations relating to the administration of this Plan, to
determine the duration and purposes of leaves of absence which may be granted to
Participants without constituting a termination of their employment for purposes
of this Plan and to make all other determinations necessary or advisable for the
administration of this Plan. The determinations of the Committee on the
foregoing matters shall be conclusive.
Any action taken by, or inaction of, the Corporation, any Subsidiary,
the Board of Directors or the Committee relating to this Plan shall be within
the absolute discretion of that entity or body and shall be conclusive and
binding upon all persons. No member of the Board of Directors or Committee, or
officer of the Corporation or Subsidiary, shall be liable for any such action or
inaction of the entity or body, of another person or, except in circumstances
involving bad faith, of himself or herself. Subject only to compliance with the
express provisions hereof, the Board of Directors and the Committee may act in
their absolute discretion in matters related to this Plan.
2.3 Participation.
Awards may be granted only to Eligible Employees. An Eligible Employee
who has been granted an Award may, if otherwise eligible, be granted additional
Awards if the Grantor shall so determine. Members of the Board of Directors who
are not officers or employees of the Company and members of the Committee shall
not be eligible to receive Awards.
2.4 Stock Subject to this Plan.
Subject to Section 7.2, the stock to be offered under this Plan shall
be treasury shares or shares of the Corporation's authorized but unissued Common
Stock. The aggregate amount of Common Stock that may be issued or transferred
pursuant to Awards granted under this Plan shall not exceed 4,500,000 shares,
subject to adjustment as set forth in Section 7.2. If any Option and any related
Stock Appreciation Right shall lapse or terminate without having been exercised
in full, or any Common Stock subject to a Restricted Stock Award shall not vest
or any Common Stock subject to a Performance Share Award shall not have been
transferred, the unpurchased, unvested or untransferred shares subject thereto
shall again be available for purposes of this Plan. No more than 10% of the
aggregate amount of Common Stock available under this Plan may be granted as
Restricted Stock Awards.
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2.5 Grants of Awards.
Either the Board of Directors or the Committee may grant Awards in
accordance with the provisions of this Plan. A majority of the members of the
Board of Directors acting hereunder shall be Disinterested. The grant of an
Award is made on the Award Date.
III. OPTIONS.
3.1 Grants.
One or more Options may be granted to any Eligible Employee. Each
Option so granted shall be designated by the Grantor as either a Nonqualified
Stock Option or Incentive Stock Option.
3.2 Option Price.
The purchase price per share of the Common Stock covered by each
Option shall be determined by the Grantor but shall not be less than the Fair
Market Value of such Common Stock on the Award Date. The purchase price of any
shares purchased shall be paid in full at the time of each purchase in cash, or,
provided that the Grantor permits such exercise, in shares of Common Stock which
shall be valued at their Fair Market Value on the date of exercise of the
Option, or partly in such shares and partly in cash, or in such other form or
such other manner as the Board of Directors may determine.
3.3 Option Period.
Each Option and all rights or obligations thereunder shall expire on
such date as shall be determined by the Grantor, but not later than ten years
and one day after the Award Date, and shall be subject to earlier termination as
hereinafter provided.
3.4 Exercise of Options.
Except as otherwise provided in Section 7.4 and subject to Section
7.5, an Option may become exercisable, in whole or in part, subsequent to the
date or dates specified in the Award Agreement and until the expiration or
earlier termination of the Participant's Option. The Grantor may, at any time
after grant of the Option and from time to time, increase the number of shares
purchasable at any time so long as the total number of shares subject to the
Option is not increased. No Option shall be exercisable except in respect of
whole shares, and fractional share interests shall be disregarded. Not fewer
than 10 shares may be purchased at one time unless the number purchased is the
total number at the time available for purchase under the Option.
3.5 Limitations on Grant of Incentive Stock Options.
(a) The aggregate Fair Market Value (determined as of the Award Date)
of the Common Stock for which Incentive Stock Options may be first exercisable
by any Participant during any calendar year under this Plan, together with that
of common stock subject to incentive stock options first exercisable (other than
as a result of acceleration pursuant to Section 7.4) by such Participant under
any other plan of the Corporation or any Subsidiary, shall not exceed $100,000.
(b) There shall be imposed in the Award Agreement relating to
Incentive Stock Options such terms and conditions as are required in order that
the Option be an "incentive stock option" as that term is defined in Section
422A of the Code.
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IV. STOCK APPRECIATION RIGHTS.
4.1 Grants.
In its discretion, the Grantor may grant Stock Appreciation Rights
concurrently with the grant of Options. A Stock Appreciation Right shall extend
to all or a portion of the shares covered by the related Option. If a Stock
Appreciation Right extends to less than all the shares covered by the related
Option and if a portion of the related Option is thereafter exercised, the
number of shares subject to the unexercised Stock Appreciation Right shall be
reduced only if and to the extent that the remaining number of shares covered by
such related Option is less than the remaining number of shares subject to such
Stock Appreciation Right. A Stock Appreciation Right shall entitle the
Participant who holds the related Option, upon exercise of the Stock
Appreciation Right and surrender of the related Option, or portion thereof, to
the extent the Stock Appreciation Right and related Option each were previously
unexercised, to receive payment of an amount determined pursuant to Section 4.3.
Any Stock Appreciation Right granted in connection with an Incentive Stock
Option shall contain such terms as may be required to comply with the provisions
of Section 422A of the Code and the regulations promulgated thereunder.
4.2 Exercise of Stock Appreciation Rights.
(a) A Stock Appreciation Right shall be exercisable only at such time
or times, and to the extent, that the related Option shall be exercisable and
only when the Fair Market Value of the stock subject to the related Option
exceeds the exercise price of the related Option.
(b) Notwithstanding any other provision of this Plan, the Committee
may impose, by rule and in Award Agreements, such conditions upon a Stock
Appreciation Right and the related Option and upon their exercises (including,
without limitation, conditions limiting the time of exercise to specified
periods) as may be required to satisfy applicable regulatory requirements,
including, without limitation, Rule 16b-3 (or any successor rule) promulgated by
the Securities and Exchange Commission pursuant to the Act.
(c) In the event that a Stock Appreciation Right is exercised, the
number of shares of Common Stock subject to the related Option shall be charged
against the maximum amount of Common Stock that may be issued or transferred
pursuant to Awards under this Plan. The number of shares subject to the Stock
Appreciation Right and related Option shall be reduced by such number of shares.
4.3 Payment.
(a) Upon exercise of a Stock Appreciation Right and surrender of an
exercisable portion of the related Option, the Participant shall be entitled to
receive payment of an amount determined by multiplying
(i) the difference obtained by subtracting the exercise price
per share of Common Stock under the related Option from the Fair
Market Value of a share of Common Stock on the date of exercise of the
Stock Appreciation Right, by
(ii) the number of shares with respect to which the Stock
Appreciation Right shall have been exercised.
(b) The Committee or the Board of Directors, in its sole discretion,
may settle the amount determined under paragraph (a) above solely in cash,
solely in shares of Common Stock (valued at Fair Market Value on the date of
exercise of the Stock Appreciation Right), or partly in such shares and partly
in cash provided that the Committee or the Board of Directors shall have
determined that such exercise and payment are consistent with applicable law. In
any event, cash shall be paid in lieu of fractional shares. Absent a
determination to the contrary, all Stock Appreciation Rights shall be settled in
cash as soon as practicable after exercise.
(c) The maximum amount per share which shall be payable upon exercise
of a Stock Appreciation Right shall be 200% of the exercise price of the related
Option.
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V. RESTRICTED STOCK AWARDS.
5.1 Grants.
Subject to Section 2.4, the Grantor may, in its discretion, grant one
or more Restricted Stock Awards to any Eligible Employee. Each Restricted Stock
Award Agreement shall specify the number of shares of Common Stock to be issued
to the Participant, the date of such issuance, the price, if any, to be paid for
such shares by the Participant and the restrictions imposed on such shares,
which restrictions shall not terminate earlier than one year after the Award
Date. Shares of Restricted Stock shall be evidenced by a stock certificate
registered only in the name of the Participant, which stock certificate shall be
held by the Corporation until the restrictions on such shares shall have lapsed
and those shares shall have thereby vested.
5.2 Restrictions.
(a) Shares of Common Stock included in Restricted Stock Awards
may not be sold, assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily, until such shares have vested.
(b) Participants receiving Restricted Stock shall be entitled to
dividend and voting rights for the shares issued even though they are not
vested, provided that such rights shall terminate immediately as to any
forfeited Restricted Stock.
(c) In the event that the Participant shall have paid cash in
connection with the Restricted Stock Award, the Award Agreement shall specify
whether and to what extent such cash shall be returned upon a forfeiture (with
or without an earnings factor).
VI. PERFORMANCE SHARE AWARDS.
6.1 Grants.
The Grantor may, in its discretion, grant Performance Share Awards to
Eligible Employees based upon such factors as the Grantor shall determine. A
Performance Share Award Agreement shall specify the number of shares of Common
Stock subject to the Performance Share Award, the price, if any, to be paid for
such shares by the Participant and the conditions upon which issuance to the
Participant shall be based, which issuance shall not be earlier than one year
after the Award Date.
VII. OTHER PROVISIONS.
7.1 Rights of Eligible Employees, Participants and Beneficiaries.
(a) Status as an Eligible Employee shall not be construed as a
commitment that any Award will be made under this Plan to an Eligible Employee
or to Eligible Employees generally.
(b) Nothing contained in this Plan (or in Award Agreements or in
any other documents related to this Plan or to Awards) shall confer upon an
Eligible Employee or Participant any right to continue in the employ of the
Company or constitute any contract or agreement of employment, or interfere in
any way with the right of the Company to reduce such person's compensation or to
terminate the employment of such Eligible Employee or Participant, with or
without cause, but nothing contained in this Plan or any document related
thereto shall affect any other contractual right of any Eligible Employee or
Participant.
(c) Amounts payable pursuant to an Award shall be paid only to
the Participant or, in the event of the Participant's death, to the
Participant's Beneficiary or, in the event of the Participant's Total
Disability, to the Participant's Personal Representative or, if there is none,
to the Participant. Other than by will or the
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laws of descent and distribution, no benefit payable under, or interest in, this
Plan or in any Award shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge and any such attempted
action shall be void and no such benefit or interest shall be, in any manner,
liable for, or subject to, debts, contracts, liabilities, engagements or torts
of any Eligible Employee, Participant or Beneficiary. The Committee shall
disregard any attempt at transfer, assignment or other alienation prohibited by
the preceding sentence and shall pay or deliver such cash or shares of Common
Stock in accordance with the provisions of this Plan.
(d) No Participant, Beneficiary or other person shall have any
right, title or interest in any fund or in any specific asset (including shares
of Common Stock) of the Company by reason of any Award granted hereunder. There
shall be no funding of any benefits which may become payable hereunder. Neither
the provisions of this Plan (or of any documents related hereto), nor the
creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive an Award hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Company.
Awards payable under this Plan shall be paid from the general assets of the
Corporation, and no special or separate fund or deposit shall be established and
no segregation of assets shall be made to assure payment of such Awards. Nothing
in this Plan shall be deemed to give any Eligible Employee or Participant any
right to participate in this Plan except in accordance herewith.
7.2 Adjustments upon Changes in Capitalization.
If the outstanding shares of Common Stock are increased, decreased or
changed into, or exchanged for, a different number or kind of shares or
securities of the Corporation through a reorganization or merger in which the
Corporation is the surviving entity, or through a combination, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
an appropriate adjustment shall be made in the number and kind of shares that
may be issued pursuant to Awards. A corresponding adjustment to the
consideration payable with respect to Awards granted prior to any such change
and to the price, if any, paid in connection with Restricted Stock Awards shall
also be made. Any such adjustment, however, shall be made without change in the
total payment, if any, applicable to the portion of the Award not exercised,
vested or issued but with a corresponding adjustment in the price for each
share. Corresponding adjustments shall be made with respect to Stock
Appreciation Rights based upon the adjustments made to the Options to which they
are related.
Upon the dissolution or liquidation of the Corporation, or upon a
reorganization, merger, or consolidation of the Corporation with one or more
corporations as a result of which the Corporation is not the surviving
Corporation, or upon a sale of substantially all the property of the Corporation
to another corporation, this Plan shall terminate, and any outstanding Options,
Stock Appreciation Rights and Performance Share Awards shall terminate and any
Restricted Stock shall be forfeited, unless provision be made in connection with
such transaction for the assumption of Awards theretofore granted, or the
substitution for such Awards of new incentive awards covering the stock of a
successor employer corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to number and kind of shares and prices.
In so adjusting Common Stock to reflect such changes, or in
determining that no such adjustment is necessary, the Board of Directors may
rely upon the advice of independent counsel and accountants of the Corporation,
and the determination of the Board of Directors shall be conclusive. No
fractional shares of stock shall be issued under this Plan on account of any
such adjustment.
7.3 Termination of Employment.
(a) Upon the date a Participant is no longer employed by the
Company for any reason other than Retirement, death or Total Disability, (i) the
Participant shall have one year from that date to exercise his or her Options to
the extent they shall have become exercisable on that date and any Options not
exercisable on that date shall terminate; (ii) shares of Common Stock subject to
the Participant's Restricted Stock Award shall be forfeited in accordance with
the provisions of the related Award Agreement to the extent such shares have
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not become vested on that date; and (iii) shares of Common Stock subject to the
Participant's Performance Share Award shall be forfeited in accordance with the
provisions of the related Award Agreement to the extent such shares have not
been issued or become issuable on that date.
(b) Upon the date a Participant is no longer employed by the
Company as a result of Retirement, death or Total Disability, (i) the
Participant, his or her Beneficiary, or Personal Representative, as the case may
be, shall have three years from that date to exercise the Participant's Options
to the extent they shall have become exercisable by that date and any Options
not exercisable on that date shall terminate; (ii) shares of Common Stock
subject to the Participant's Restricted Stock Award shall be forfeited in
accordance with the provisions of the related Award Agreement to the extent such
shares have not become vested on that date; and (iii) shares of Common Stock
subject to the Participant's Performance Share Award shall be forfeited in
accordance with the provisions of the related Award Agreement to the extent such
shares have not been issued or become issuable on that date. In the event of
termination of employment as a result of Retirement, death or Total Disability,
the Grantor may, in its discretion, increase the portion of the Participant's
Award available to the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, upon such terms as the Grantor shall
determine.
(c) Each Stock Appreciation Right shall have the same
termination provisions and exercisability periods as the Option to which it
relates. The exercisability period of a Stock Appreciation Right or of an Option
shall not exceed that provided in Section 3.3 or in the related Award Agreement.
Each Option and Stock Appreciation Right shall expire at the end of that
exercisability period.
(d) If an entity ceases to be a Subsidiary, such action shall be
deemed for purposes of this Section 7.3 to be a termination of employment of
each employee of that entity.
(e) Upon forfeiture of a Restricted Stock Award pursuant to this
Section 7.3, the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, shall transfer to the Corporation the
portion of the Restricted Stock Award not vested at the date of termination of
employment, without payment of any consideration by the Company for such
transfer unless the Participant paid a purchase price in which case repayment,
if any, of that price shall be governed by the Award Agreement. Notwithstanding
any such transfer to the Corporation, or failure, refusal or neglect to
transfer, by the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, such nonvested portion of any Restricted
Stock Award shall be deemed transferred automatically to the Corporation on the
date of termination of employment. The Participant's original acceptance of the
Restricted Stock Award shall constitute his or her appointment of the
Corporation and each of its authorized representatives as attorney(s)-in-fact to
effect such transfer and to execute such documents as the Corporation or such
representatives deem necessary or advisable in connection with such transfer.
7.4 Acceleration of Awards.
Unless, prior to an Event, the Board of Directors determines that,
upon its occurrence, there shall be no acceleration of Awards or determines
those Awards which shall be accelerated and the extent to which they shall be
accelerated, (i) each Option and each related Stock Appreciation Right shall
become immediately exercisable to the full extent theretofore not exercisable,
(ii) Restricted Stock shall immediately vest free of restrictions and (iii) the
number of shares covered by each Performance Share Award shall be issued to the
Participant; provided, however, that Awards shall not, in any event, be so
accelerated to a date less than one year after the Award Date. Acceleration of
Awards shall comply with applicable regulatory requirements, including, without
limitation, Rule 16b-3 promulgated by the Securities and Exchange Commission
pursuant to the Act and Section 422A of the Code. For purposes of this Section
7.4 only, Board of Directors shall mean the Board of Directors as constituted
immediately prior to the Event.
7.5 Continuation of Employment.
Each person to whom an Award is granted must agree that he or she
will, at the request of the Company, remain in the continuous employment of the
Company for a period of not less than one year
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following the Award Date. No Option or Stock Appreciation Right shall be
exercisable, no Restricted Stock shall vest and no Performance Share Award shall
be paid unless the Participant has remained in the continuous employment of the
Company for at least one year from the Award Date.
7.6 Government Regulations.
This Plan, the granting of Awards under this Plan and the issuance or
transfer of shares of Common Stock (and/or the payment of money) pursuant
thereto are subject to all applicable Federal and state laws, rules and
regulations and to such approvals by any regulatory or governmental agency
(including without limitation "no action" positions of the Securities and
Exchange Commission) which may, in the opinion of counsel for the Corporation,
be necessary or advisable in connection therewith. Without limiting the
generality of the foregoing, no Awards may be granted under this Plan, and no
shares shall be issued by the Corporation, nor cash payments made by the
Corporation, pursuant to or in connection with any such Award, unless and until,
in each such case, all legal requirements applicable to the issuance or payment
have, in the opinion of counsel to the Corporation, been complied with. In
connection with any stock issuance or transfer, the person acquiring the shares
shall, if requested by the Corporation, give assurances satisfactory to counsel
to the Corporation in respect of such matters as the Corporation may deem
desirable to assure compliance with all applicable legal requirements.
7.7 Tax Withholding.
The Company shall have the right to deduct from any payment hereunder
any amounts that Federal, state, local or foreign tax law requires to be
withheld with respect to such payment but, in the alternative, the Participant
may, prior to the payment of any Award, pay such amounts to the Company in cash
or in shares of Common Stock (which shall be valued at their Fair Market Value
on the date of payment). There is no obligation under this Plan that any
Participant be advised of the existence of the tax or the amount required to be
withheld. Without limiting the generality of the foregoing, in any case where it
determines that a tax is required to be withheld in connection with the issuance
or transfer of shares of Common Stock under this Plan, the Company may, pursuant
to such rules as the Committee may establish, reduce the number of such shares
so issued or transferred by such number of shares as the Company may deem
appropriate in its sole discretion to accomplish such withholding.
Notwithstanding any other provision of this Plan, the Committee may
impose such conditions on the payment of any withholding obligation as may be
required to satisfy applicable regulatory requirements, including, without
limitation, Rule 16b-3 promulgated by the Securities and Exchange Commission
pursuant to the Act.
7.8 Amendment, Termination and Suspension.
(a) The Board of Directors may, at any time, terminate or, from
time to time, amend, modify or suspend this Plan (or any part thereof). In
addition, the Committee may, from time to time, amend or modify any provision of
this Plan except Sections 7.4 and 7.8(b). The Grantor, with the consent of the
Participant, may make such modifications of the terms and conditions of such
Participant's Award as it shall deem advisable. No Awards may be granted during
any suspension of this Plan or after its termination. The amendment, suspension
or termination of this Plan shall not, without the consent of the Participant,
alter or impair any rights or obligations pertaining to any Awards granted under
this Plan prior to such amendment, suspension or termination, including any
right to acceleration under Section 7.4. The Grantor shall have the power and
may, with the consent of the Participant, cancel any existing Awards and reissue
Awards to the Participant, having a new and lower Fair Market Value, but
otherwise bearing substantially similar terms to the cancelled Awards.
(b) If an amendment would (i) materially increase the benefits
accruing to Participants within the meaning of Rule 16b-3(a) under the Act or
any successor thereto, (ii) increase the aggregate number of shares which may be
issued under this Plan, or (iii) modify the requirements of eligibility for
participation in this Plan, the amendment shall be approved by the Board of
Directors and by the stockholders. For purposes of
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this Section 7.8(b) any cancellation and reissuance of Awards at a new or lower
Fair Market Value pursuant to Section 7.8(a) shall not constitute an amendment
of this Plan.
7.9 Privileges of Stock Ownership; Nondistributive Intent.
A Participant shall not be entitled to the privilege of stock
ownership as to any shares of Common Stock not actually issued to him. Upon the
issuance and transfer of shares to the Participant, unless a registration
statement is in effect under the Securities Act of 1933, as amended, relating to
such issued and transferred Common Stock and there is available for delivery a
prospectus meeting the requirements of Section 10 of such Act, the Common Stock
may be issued and transferred to the Participant only if he represents and
warrants in writing to the Corporation that the shares are being acquired for
investment and not with a view to the resale or distribution thereof. No shares
shall be issued and transferred unless and until there shall have been full
compliance with any then applicable regulatory requirements (including those of
any exchanges upon which any Common Stock of the Corporation may be listed).
7.10 Effective Date of this Plan.
This Plan shall be effective upon its approval by the stockholders of
the Corporation.
7.11 Term of this Plan.
Unless previously terminated by the Board of Directors or the
Committee, this Plan shall terminate at the close of business on April 19, 1998,
and no Awards shall be granted under it thereafter, but such termination shall
not affect any Award theretofore granted.
7.12 Governing Law.
This Plan and the documents evidencing Awards and all other related
documents shall be governed by, and construed in accordance with, the laws of
the State of California. If any provision shall be held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions of this
Plan shall continue to be fully effective.
The following provision was added to the plan by the BAC Board of
Directors on August 7, 1995. For purposes of this provision, "BankAmerica" means
BankAmerica Corporation and "Company" means BankAmerica and its subsidiaries
collectively.
Notwithstanding any other provision in the Plan, the following shall
apply in the event of a Change in Control, as defined below, in BankAmerica:
Change in Control means that one of the following events has occurred:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (i) the then outstanding shares of common stock of
BankAmerica (the "Outstanding BankAmerica Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of BankAmerica entitled
to vote generally in the election of directors (the "Outstanding BankAmerica
Voting Securities"); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from BankAmerica (ii) any acquisition by BankAmerica,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or (iv) any acquisition by any corporation pursuant
to a transaction which complies with clauses (A), (B) and (C) of subsection
(iii) below.
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
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becoming a director subsequent to the date hereof whose election, or nomination
for election by BankAmerica's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board.
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of BankAmerica or any of its subsidiaries (a "Business Combination"), in
each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding BankAmerica Common Stock and Outstanding
BankAmerica Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 80% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns BankAmerica or all or substantially all of BankAmerica's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding BankAmerica Common Stock and Outstanding
BankAmerica Voting Securities, as the case may be, (provided, however, that, for
the purposes of this clause (A), any shares of common stock or voting securities
of such resulting corporation received by such beneficial owners in such
Business Combination other than as the result of such beneficial owners'
ownership of Outstanding BankAmerica Common Stock or Outstanding BankAmerica
Voting Securities immediately prior to such Business Combination shall not be
considered to be owned by such beneficial owners for the purposes of calculating
their percentage of ownership of the outstanding common stock and voting power
of the resulting corporation), (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of, respec
tively, the then outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation unless such Person owned 20%
or more of the Outstanding BankAmerica Common Stock or Outstanding BankAmerica
Voting Securities immediately prior to the Business Combination and (C) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination.
(iv) Approval by the shareholders of BankAmerica of a
complete liquidation or dissolution of BankAmerica.
(a) All outstanding stock options and stock appreciation rights under
the Plan shall be immediately exercisable in full if BankAmerica undergoes a
Change in Control.
(b) Except as provided in the following sentence and in (c) below, if
applicable to the Plan, in the event an employee terminates employment with the
Company following a Change in Control, his or her stock options and stock
appreciation rights granted under the Plan shall remain exercisable for a period
of three years following termination of employment, not to exceed the original
term of the stock option or stock appreciation right. The preceding sentence
shall not apply to an incentive stock option unless the option agreement gives
the Plan committee discretion to permit the incentive stock option to remain
exercisable following termination of the optionholder's employment, in which
case the incentive stock option shall be exercisable for three months following
termination of employment without further committee action.
(c) Subsection (b) shall not apply to stock options and stock
appreciation rights granted under the Plan to a person who, at the time of such
termination of employment, is an officer or director of BankAmerica, as such
terms are defined in Section 16 of the Securities Exchange Act of 1934 and the
rules of the Securities and Exchange Commission thereunder.
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(d) The Company shall have the right to deduct from any settlement of
any stock option or stock appreciation right an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to take
such other action as may be necessary to satisfy any such withholding
obligation.
The resolution adding the above provision provided that no
modification, suspension, amendment or termination of the Plan may be made which
would adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option or stock appreciation right granted
under the Plan prior to the date of such modification, suspension, amendment or
termination.
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EXHIBIT 10.e.
SECURITY PACIFIC CORPORATION
STOCK OPTION PLAN
As amended
Last Amended August 7, 1995
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Board of Directors April 27, 1992
BankAmerica Corporation
RESOLUTION RE AMENDMENT OF STOCK AND STOCK-BASED AWARD PLANS
IN CONNECTION WITH THE MERGER OF
BANKAMERICA CORPORATION AND SECURITY PACIFIC CORPORATION
--------------------------------------------------------
The Board of Directors of BankAmerica Corporation ("BAC") authorizes and
determines:
1. As of April 22, 1992, the effective date of the merger of Security
Pacific Corporation ("SPC") into BAC (the "Merger"), SPC sponsored the following
plans (the "SPC Stock Plans") pursuant to which awards of stock and stock-based
incentives have been made:
Security Pacific Corporation Stock-Based Incentive Award Plan
Security Pacific Corporation Stock Option Plan
Management Incentive Stock Plan of Rainier Bancorporation
Security Pacific Corporation Performance Incentive Plan
2. Grants and awards have been made and are outstanding under the SPC
Stock Plans. BAC assumes the obligations of, and shall be successor to, SPC
under the SPC Stock Plans.
3. The SPC Stock Plans are amended as follows, effective April 22, 1992:
a. Except as provided in (b), below, and unless the context clearly
indicates otherwise, references to SPC shall become references to BAC and
references to Security Pacific National Bank shall become references to
Bank of America NT&SA.
b. The names of the SPC Stock Plans shall remain unchanged.
c. Unless the context clearly indicates otherwise, all references
to SPC Common Stock, par value $10.00, shall become references to BAC
Common Stock, par value $1.5625.
d. Only employees of SPC prior to the Merger are eligible to
participate in the SPC Stock Plans.
e. All references to the Executive Officers Compensation and
Development Committee of the Board of Directors of SPC and to the
"Committee" in the Rainier Bancorporation Management Incentive Stock Plan
shall become references to the Executive Personnel and Compensation
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Committee of the Board of Directors of BAC, which is and shall be composed
solely of disinterested directors.
4. BAC's Personnel Relations Officer is further authorized and directed
to take such action as she deems necessary and appropriate to implement the
provisions of the foregoing resolution.
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SECURITY PACIFIC CORPORATION
STOCK OPTION PLAN
1. PURPOSE.
The purpose of this Stock Option Plan ("Plan") is to strengthen Security
Pacific Corporation ("Corporation"), by providing an additional means of
retaining and attracting competent management personnel and by providing to
participating officers and other key employees of the Corporation and its
subsidiaries (as hereinafter defined) added incentive for high levels of
performance and for unusual efforts to increase the earnings of the Corporation
through the opportunity for stock ownership offered under this Plan.
2. ADMINISTRATION.
The Plan shall be administered by the Executive Officers Compensation and
Development Committee ("Committee") of the Board of Directors ("Board") of the
Corporation. The Committee shall consist of three or more members of the Board
selected by, and serving at the pleasure of, the Board. There may be appointed
to the Committee only members of the Board who are disinterested, i.e., who are
not eligible to receive options or stock appreciation rights under the Plan and
who have not been eligible, at any time within one year prior to appointment to
the Committee, for selection as a person to whom stock may be allocated or to
whom options or stock appreciation rights may be granted pursuant to the Plan or
any other plan of the Corporation or any of its subsidiaries entitling the
participants therein to acquire stock, stock appreciation rights or stock
options of the Corporation or any of its subsidiaries. Any action of the
Committee with respect to the administration of the Plan shall be taken pursuant
to a majority vote, or to the written consent of all of its members.
Subject to the express provisions of the Plan, the Committee shall have the
authority to construe and interpret the Plan, and to define the terms used
therein, to prescribe, amend and rescind rules and regulations relating to the
administration of the Plan, to determine the duration and purposes of leaves of
absence which may be granted to participants without constituting a termination
of their employment for the purposes of the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan. The
determinations of the Committee on the matters referred to in this section shall
be conclusive.
3. PARTICIPATION.
Officers and other key employees ("eligible employees") of the Corporation
or of any subsidiary corporation (as such term is defined in Section 425(f) of
the Internal Revenue Code of 1986,
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as amended, the "Code") shall be eligible for selection to participate in the
Plan; provided, however, that members of the Committee shall not, while serving
as members of such Committee, be eligible to receive a grant of options or stock
appreciation rights under the Plan. Directors who are not officers or employees
of the Corporation or any such subsidiary corporation are not eligible to
participate in the Plan. The Committee shall have the authority and power to
grant options and stock appreciation rights to any eligible employee other than
a member of the Office of the Chairman as such body shall be constituted from
time to time by the Board. With respect to the options and stock appreciation
rights which the Committee is authorized to grant, the Committee may also
determine the terms and provisions of the respective option agreements (which
need not be identical), the designation of an option as a nonqualified option or
incentive stock option, the times at which such options and stock appreciation
rights shall be granted, and the number of shares subject to each option and,
where applicable, companion stock appreciation right. Any action of the
Committee with respect to option grants shall be taken pursuant to a majority
vote of all the members of the Committee or the written consent of all of its
members.
The Board shall have the authority and power, after consideration of the
recommendations of the Committee, to grant options and stock appreciation rights
to any eligible employee including members of the Office of the Chairman. With
respect to the options and stock appreciation rights which the Board is
authorized to grant, the Board may also determine the terms and provisions of
the respective option agreements (which need not be identical), the designation
of an option as a nonqualified option or incentive stock option, the times at
which such options and stock appreciation rights shall be granted, and the
number of shares subject to each option and, where applicable, companion stock
appreciation right. Any action of the Board with respect to option grants shall
be taken pursuant to a vote of a disinterested majority of all the members of
the Board or the written consent of all of its members. A director eligible for
a grant of an option or stock appreciation right shall not participate in the
vote on any such grant nor in the determination as to whether an option or stock
appreciation right should be awarded to such director.
An individual who has been granted an option may, if otherwise eligible, be
granted an additional option or options and stock appreciation right or rights,
if the Board or the Committee, as the case may be, shall so determine.
4. STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 9 hereof, the stock to be
offered under the Plan shall be treasury shares or shares of the Corporation's
authorized but unissued Common Stock
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(hereinafter collectively called "stock"). The aggregate amount of stock to be
delivered upon the exercise of all options granted under this Plan shall not
exceed 4,500,000 shares, subject to adjustment as set forth in Section 9 hereof.
If any option granted hereunder and related stock appreciation right or rights,
if any, shall lapse or terminate without having been exercised in full, the
unpurchased shares subject thereto shall again be available for the purposes of
the Plan. For purposes of determining the number of shares to charge against
the 4,500,000 share limitation set forth above, the exercise of a stock
appreciation right or rights shall be treated as the exercise of the portion of
the option or options which are surrendered in connection with the exercise of
the stock appreciation right or rights.
5. OPTIONS.
One or more options may be granted to any eligible employee. Each option
so granted shall be designated by the Board or the Committee, as the case may
be, as either a nonqualified option or incentive stock option subject to the
following conditions:
(a) The option price per share of stock shall be set by the grant but
shall in no instance be less than fair market value on the date of grant,
based on the value of the stock on the date of grant of options as
determined by the mean of the bid and asked prices for the Common Stock as
supplied by the National Association of Securities Dealers, Inc., through
NASDAQ and published in the Western Edition of The Wall Street Journal, or
the closing price of such stock as reported on the Composite Tape and
published in the Western Edition of The Wall Street Journal.
(b) The option shall become exercisable in such manner and within
such period or periods as shall be determined by the Board or the
Committee, as the case may be, (subject to the limitations set forth in
this Section 5 and in Sections 6 and 10 hereof) upon payment in full solely
in cash, solely in shares of Common Stock or partly in such shares and
partly in cash. Any shares of Common Stock received as payment for an
option exercise shall be valued at the mean of the bid and asked prices for
the Common Stock as supplied by the National Association of Securities
Dealers, Inc., through NASDAQ and published in the Western Edition of The
Wall Street Journal, or the closing price of such stock as reported on the
Composite Tape and published in the Western Edition of The Wall Street
Journal on the date of exercise of the stock option. The option shall
lapse:
(1) If the grantee is then living, at the earliest of the
following times:
(i) ten years after it is granted,
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(ii) immediately upon termination of employment by reason
of a discharge for cause as that term may be determined by the
Committee in its sole discretion,
(iii) one year after termination of employment if
termination occurs after fifteen years of service to the
Corporation and any of its subsidiary corporations or by reason
of retirement or disability as those terms are determined by the
Committee in its sole discretion,
(iv) three months after termination of employment other
than as described in (ii) and (iii) above,
(v) any earlier time set by the grant; or
(2) If the grantee dies while employed by the Corporation or any
subsidiary corporation, or during the period referred to in Section
5(b)(1)(iii) or (iv) hereof, one year after the date of death subject
to earlier termination pursuant to Sections 5(b)(1)(i) or (v). During
the period after death, the option may, to the extent exercisable on
the date of death, be exercised by the person or persons to whom the
grantee's rights under the option shall pass by will or by the
applicable laws of descent and distribution; and
(3) Notwithstanding (1) and (2) above, on the date of
termination of employment whether for death or any other cause to the
extent of any portion of the option not exercisable on such date of
termination.
(4) Notwithstanding (1) above, effective on the date of the
merger of Security Pacific Corporation and BankAmerica Corporation
(the "Merger Date") the period of exercise of all outstanding options
shall be extended from three months to one year after termination of
employment, in the case of all terminations other than terminations by
reason of death or discharge for cause; provided, however, that no
such extension shall apply to any nonqualified option unless the
grantee consents to such extension; and provided further, that such
extension shall not be available under any incentive stock option
unless, upon the written request of the grantee, the Committee shall,
in its sole discretion, determine to grant such extension. Prior to
the Merger Date the Committee may, in its sole discretion, extend the
period of exercise of any outstanding options to one year after
termination of employment subject to the receipt of the grantee's
consent in the case of nonqualified options and subject
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to a grantee's request in the case of incentive stock options as
provided in the preceding sentence."
(c) Incentive stock options shall be so designated at the time of
grant except that options granted on or before December 31, 1980, may be
designated as incentive stock options on or before August 1, 1982, and
options granted from January 1, 1981 through April 20, 1982, may be
designated as incentive stock options on or before April 20, 1982.
Incentive stock options shall be subject to the conditions specified in
Section 5(a) and 5(b) and subject to the additional following conditions:
(1) An incentive stock option granted prior to January 1, 1987,
shall not be exercisable while there is outstanding, within the
meaning of Section 422A of the Code, any other incentive stock option
which was earlier granted to the employee.
(2) The aggregate fair market value of the shares (determined as
of the date the incentive stock option is granted) for which any
employee may be granted incentive stock options in any calendar year
prior to January 1, 1987, shall not exceed $100,000 plus any unused
limit carried forward to such year. The unused limit carried forward
available in any such year to any employee shall be determined in
accordance with Section 422A of the Code.
(3) For incentive stock options granted after December 31, 1986,
the aggregate fair market value of the shares (determined as of the
date the incentive stock option is granted) with respect to which such
incentive stock options are exercisable for the first time (other than
as a result of acceleration pursuant to Section 10) by an employee
during any calendar year (under the Plan or any other incentive stock
option plan of the Corporation or of any subsidiary corporation) shall
not exceed $100,000.
(4) There shall be imposed any other conditions required in
order that the option be an "incentive stock option" as that term is
defined in Section 422A of the Code.
6. CONTINUATION OF EMPLOYMENT; EXERCISE.
Each person to whom an option is granted must agree that he or she will, at
the request of the Corporation, remain in the continuous employ of the
Corporation or a subsidiary corporation for a period of not less than one year
following the date of the granting of the option. Nothing contained in the Plan
(or in any option or stock appreciation right granted pursuant to the Plan)
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shall confer upon any employee any right to continue in the employ of the
Corporation or of any subsidiary corporation or to interfere in any way with the
right of the Corporation or any subsidiary corporation to reduce his or her
compensation from the rate in existence at the time of the granting of an option
or stock appreciation right, but nothing contained herein or in an option
agreement shall affect any contractual rights of an employee.
Options shall be nonexercisable during the first year after the date of
grant. If the holder of an option shall not purchase all of the shares which he
or she is entitled to purchase in any given installment period, the right to
purchase shares not purchased in such installment period shall continue until
the lapse or termination of such option. No option or installment thereof shall
be exercisable except in respect of whole shares, and fractional share interests
shall be disregarded except that they may be accumulated in accordance with the
next preceding sentences. Not less than 10 shares may be purchased at one time
unless the number purchased is the total number at the time available for
purchase under the option.
7. STOCK APPRECIATION RIGHTS.
A stock appreciation right may be granted, in the discretion of the Board
or the Committee, as the case may be, concurrently with the grant of any option
granted under the Plan ("companion grant") subject to Section 11 of the Plan. A
stock appreciation right shall extend to all or a portion of the shares covered
by the companion grant. If a stock appreciation right extends to less than all
the shares covered by the companion grant and if a portion of the option
contained in the companion grant is thereafter exercised, the number of shares
subject to the unexercised stock appreciation right shall be reduced only if and
to the extent that the remaining portion of the option contained in the
companion grant covers fewer shares than the unexercised stock appreciation
right would otherwise cover. A stock appreciation right shall entitle the
holder (subject to the conditions and limitations set forth below), upon
surrender of a then exercisable portion of the option contained in the companion
grant (subject to the maximum number of shares to which the stock appreciation
right extends), to receive payment of an amount determined pursuant to
subparagraph (b) of the following paragraph.
Stock appreciation rights shall be subject to the following terms and
conditions and to such other terms and conditions not inconsistent with the Plan
as the Board may determine:
(a) A stock appreciation right shall be exercisable by the holder (or
such other person entitled under Section 5 of the Plan to exercise the
option contained in the companion grant) only at such time or times, and to
the extent, that
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the option contained in the companion grant could have been exercised and
only when the fair market value of the stock subject to the option
contained in the companion grant exceeds the exercise price of such option.
(b) Upon exercise of the stock appreciation right and surrender of an
exercisable portion of the option contained in the companion grant, the
holder shall be entitled to receive payment of an amount (subject to
Section 7(d) below) determined by multiplying
(1) the difference obtained by subtracting the option exercise
price per share of Common Stock subject to the companion grant from
the fair market value of a share of Common Stock on the date of
exercise of the stock appreciation right as determined by the mean of
the bid and asked prices for the Common Stock as supplied by the
National Association of Securities Dealers, Inc., through NASDAQ and
published in the Western Edition of The Wall Street Journal, or the
closing price of such stock as reported on the Composite Tape and
published in the Western Edition of The Wall Street Journal, by
(2) the number of shares with respect to which the stock
appreciation right is exercised.
(c) The Committee, in its sole discretion, may settle the amount
determined under subparagraph (b) above solely in cash, solely in shares of
Common Stock (valued at the mean of the bid and asked prices for the Common
Stock as supplied by the National Association of Securities Dealers, Inc.,
through NASDAQ and published in the Western Edition of The Wall Street
Journal, or the closing price of such stock as reported on the Composite
Tape and published in the Western Edition of The Wall Street Journal on the
date of exercise of the stock appreciation right), or partly in such shares
and partly in cash, provided however, that in any event cash shall be paid
in lieu of fractional shares.
(d) The maximum amount per share which will be payable upon exercise
of a stock appreciation right shall be the option exercise price of the
option contained in the companion grant.
(e) Notwithstanding any other provision of the Plan, the Committee
may impose such conditions on exercise of a stock appreciation right
(including, without limitation, the right of the Committee to limit the
time of exercise to specified periods) as may be required to satisfy the
requirements of Rule 16b-3 (or any successor rule), promulgated by the
Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934.
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8. NON-TRANSFERABILITY OF OPTIONS.
An option or stock appreciation right granted under this Plan is non-
transferable by the option holder other than by will or the laws of descent and
distribution, and shall be exercisable during his or her lifetime only by such
option holder.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
If the outstanding shares of the Common Stock of the Corporation are
changed into, or exchanged for a different number or kind of shares or
securities of the Corporation through a reorganization or merger in which the
Corporation is the surviving entity, or through a combination, recapitalization,
reclassification, or otherwise, or if the number of outstanding shares is
changed through a stock split, stock dividend, stock consolidation or otherwise,
an appropriate adjustment shall be made in the number and kind of shares as to
which options may be granted. A corresponding adjustment changing the number or
kind of shares and the exercise price per share allocated to unexercised options
or portions thereof, which shall have been granted prior to any such change,
shall likewise be made. Any such adjustment in an outstanding option, however,
shall be made without change in the total price applicable to the unexercised
portion of the option but with a corresponding adjustment in the price for each
share covered by the option. Corresponding adjustments shall be made with
respect to stock appreciation rights based upon the adjustments made to the
option contained in the companion grant.
Upon the dissolution or liquidation of the Corporation, or upon a
reorganization, merger, or consolidation of the Corporation with one or more
corporations as a result of which the Corporation is not the surviving
corporation, or upon a sale of substantially all the property of the Corporation
to another corporation, this Plan shall terminate, and any option theretofore
granted hereunder shall terminate, unless provision be made in connection with
such transaction for the assumption of options theretofore granted, or the
substitution for such options of new options covering the stock of a successor
employer corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to number and kind of shares and prices.
In so adjusting Common Stock to reflect such changes, or in determining
that no such adjustment is necessary, the Board may rely upon the advice of
independent counsel and accountants of the Corporation, and the determination of
the Board shall be conclusive. No fractional shares of stock shall be issued
under the Plan on account of any such adjustment.
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10. CORPORATE CHANGES.
Unless, prior to an Event (as defined below), the Board determines that,
upon its occurrence, there shall be no acceleration of options or related stock
appreciation rights or determines those options and related stock appreciation
rights which shall be accelerated and the extent to which they shall be
accelerated, each option and each related stock appreciation right shall become
immediately exercisable to the full extent theretofore not exercisable
notwithstanding any provision of this Plan (or of an option holder's option
agreement); provided, however, that no option or stock appreciation right shall,
in any event, be so accelerated to a date less than one year after the date of
grant. Any of the following shall constitute an Event:
(i) Approval by the stockholders of the Corporation of the
dissolution or liquidation of the Corporation.
(ii) Approval by the stockholders of the Corporation of any agreement
to merge or consolidate, or otherwise reorganize, with or into one or more
entities which are not subsidiaries of the Corporation, as a result of
which less than 50% of the outstanding voting securities of the surviving
or resulting entity are, or are to be, owned by former stockholders of the
Corporation (excluding from the term "former stockholders" a stockholder
who is, or as a result of the transaction in question becomes, an
"affiliate", as that term is used in the Securities Exchange Act of 1934
and the Rules promulgated thereunder, of any party to such merger,
consolidation or reorganization);
(iii) Approval by the stockholders of the Corporation of the sale of
substantially all of the Corporation's business and/or assets to a person
or entity which is not a subsidiary of the Corporation; or
(iv) A Change in Control, as from time to time defined in the By-Laws
of the Corporation.
Acceleration of options and related stock appreciation rights shall comply with
applicable regulatory requirements, including, without limitation, Rule 16b-3
promulgated by the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934 and Section 422A of the Code. For purposes of this Section
10 only, Board shall mean the Board as constituted immediately prior to the
Event.
11. TERMINATION, SUSPENSION AND AMENDMENT.
The Board may at any time suspend, amend or terminate this Plan and may,
with the consent of an option holder, make such modifications of the terms and
conditions of his or her option and, where applicable, any related stock
appreciation right, as
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it shall deem advisable; provided that, except as permitted under the provisions
of Section 9 hereof, no amendment or modification may be adopted without
approval by the vote of the holders of a majority of the Corporation's
outstanding stock entitled to vote thereon which would:
(a) increase the aggregate number of shares which may be obtained
pursuant to options granted under the Plan;
(b) change the minimum option price;
(c) increase the maximum term of options or stock appreciation rights
provided for herein; or
(d) permit the granting of options or stock appreciation rights to
anyone other than an officer or other key employee of the Corporation or a
subsidiary corporation.
Notwithstanding the above, the Board or the Committee, as the case may be,
may grant to an option holder, if he or she is otherwise eligible, additional
options (with or without stock appreciation rights) or the Board, with the
consent of the option holder, may grant a new option (with or without a stock
appreciation right) in lieu of an outstanding option (with or without a stock
appreciation right) for a number of shares, at an option price and for a term
which in any respect is greater or less than that of the earlier option, subject
to the general limitations of Section 5 hereof.
No option or stock appreciation right may be granted during any suspension
of the Plan or after its termination. Except as provided in Section 9 hereof,
the amendment, suspension or termination of the Plan shall not, without the
consent of the option holder, alter or impair any rights or obligations under
any option or stock appreciation right theretofore granted under the Plan prior
to such amendment, suspension or termination, including any right to
acceleration under Section 10.
12. DATE OF GRANT OF OPTIONS.
The grant of an option or stock appreciation right pursuant to the Plan
shall take place on the date of the action described in Section 3 hereof, or at
such later date as shall be prescribed by the Board or the Committee, as the
case may be. In the event such action is taken by written consent, the action
shall be deemed to be at the date the last member of the Board or the Committee,
as the case may be, signs the consent.
13. PRIVILEGES OF STOCK OWNERSHIP; PURCHASE FOR INVESTMENT.
The holder of an option or stock appreciation right shall not be entitled
to the privilege of stock ownership as to any shares of stock not actually
issued and delivered to such option
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holder. Upon the exercise of an option (or a stock appreciation right where
stock is issued) at a time when there is not in effect a registration statement
under the Securities Act of 1933 relating to the stock issuable upon exercise
hereof and available for delivery a prospectus meeting the requirements of
Section 10(a)(3) of said Act, the stock may be issued only if the option holder
represents and warrants in writing to the Corporation that the shares purchased
are being acquired for investment and not with a view to the distribution
thereof. No shares shall be purchased upon the exercise of any option or stock
appreciation right unless and until any then applicable requirements of the
Securities and Exchange Commission, the California Corporations Commissioner, or
other regulatory agencies having jurisdiction and of any exchanges upon which
stock of the Company may be listed shall have been fully complied with.
14. TAX WITHHOLDING.
The Corporation and any subsidiary corporation shall have the right to
deduct from any payment hereunder any amounts that Federal, state, local or
foreign tax law requires to be withheld with respect to such payment. In the
alternative, pursuant to such rules as the Committee may establish, the option
holder or other person exercising any option or stock appreciation right may pay
such amounts to the Corporation or any subsidiary corporation in cash or in
shares of the Corporation's Common Stock. Without limiting the generality of
the foregoing, in any case where it determines that a tax is required to be
withheld in connection with the issuance or transfer of shares of Common Stock
under this Plan, the Corporation or any subsidiary corporation may, pursuant to
such rules as the Committee may establish, reduce the number of shares so issued
or transferred by such number of shares as the Corporation or any subsidiary
corporation may deem appropriate in its sole discretion to accomplish such
withholding. Any shares of Common Stock used to pay such withholding shall be
valued on the date as of which the amount of the tax to be withheld is
determined at the closing price of such stock as reported on the Composite Tape
and published in the Western Edition of The Wall Street Journal. There is no
obligation under this Plan that any option holder be advised of the existence of
any tax or any amount required to be withheld.
Notwithstanding any other provision of this Plan, the Committee may impose
such conditions on the payment of any withholding obligation as may be required
to satisfy applicable regulatory requirements, including, without limitation,
Rule 16b-3 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
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15. TERM OF THE PLAN.
This Plan shall be effective upon approval thereof by the vote of the
holders of a majority of the Corporation's outstanding Common Stock entitled to
vote thereon. Unless previously terminated by the Board, this Plan shall
terminate at the close of business on December 31, 1989, and no options or stock
appreciation rights shall be granted under it thereafter, but such termination
shall not affect any option or stock appreciation right theretofore granted.
16. GOVERNING LAW.
This Plan and option agreements issued hereunder shall be governed by, and
construed in accordance with, the laws of the State of California.
The following provision was added to the plan by the BAC Board of Directors
on August 7, 1995. For purposes of this provision, "BankAmerica" means
BankAmerica Corporation and "Company" means BankAmerica and its subsidiaries
collectively.
Notwithstanding any other provision in the Plan, the following shall apply
in the event of a Change in Control, as defined below, in BankAmerica:
Change in Control means that one of the following events has occurred:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of BankAmerica (the
"Outstanding BankAmerica Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of BankAmerica entitled to vote generally in
the election of directors (the "Outstanding BankAmerica Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from BankAmerica (ii) any acquisition by BankAmerica, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or (iv) any acquisition by any corporation pursuant to
a transaction which complies with clauses (A), (B) and (C) of subsection (iii)
below.
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to
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the date hereof whose election, or nomination for election by BankAmerica's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of
BankAmerica or any of its subsidiaries (a "Business Combination"), in each case,
unless, following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 80% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns BankAmerica or all or substantially all of BankAmerica's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding BankAmerica Common Stock and Outstanding BankAmerica Voting
Securities, as the case may be, (provided, however, that, for the purposes of
this clause (A), any shares of common stock or voting securities of such
resulting corporation received by such beneficial owners in such Business
Combination other than as the result of such beneficial owners' ownership of
Outstanding BankAmerica Common Stock or Outstanding BankAmerica Voting
Securities immediately prior to such Business Combination shall not be
considered to be owned by such beneficial owners for the purposes of calculating
their percentage of ownership of the outstanding common stock and voting power
of the resulting corporation), (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation unless such Person owned
20% or more of the Outstanding BankAmerica Common Stock or Outstanding
BankAmerica Voting Securities immediately prior to the Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation
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resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination.
(iv) Approval by the shareholders of BankAmerica of a complete
liquidation or dissolution of BankAmerica.
(a) All outstanding stock options and stock appreciation rights under the
Plan shall be immediately exercisable in full if BankAmerica undergoes a Change
in Control.
(b) [intentionally left blank]
(c) [intentionally left blank]
(d) The Company shall have the right to deduct from any settlement of any
stock option or stock appreciation right an amount sufficient to cover
withholding required by law for any federal, state or local taxes, of to take
such other action as may be necessary to satisfy any such withholding
obligation.
The resolution adding the above provision provided that no modification,
suspension, amendment or termination of the Plan may be made which would
adversely affect the rights of any employee or former employee under the
amendment with respect to any stock option or stock appreciation right granted
under the Plan prior to the date of such modification, suspension, amendment or
termination.
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EXHIBIT 10.f
BANKAMERICA CORPORATION AMENDED AND
RESTATED DEFERRED COMPENSATION PLAN FOR DIRECTORS,
AMENDMENT
Pursuant to Section 5(c) of the Amended and Restated Deferred Compensation
Plan for Directors (the "Plan"), at its October 2, 1995 meeting, the Board of
Directors of BankAmerica Corporation amended Section 2(c) of the Plan, effective
October 1, 1995, to require that no less than fifty percent (50%) of the annual
retainer being paid to each Eligible Director be credited to such Eligible
Director's BAC Shares Account under the Plan. The relevant portion of the
board's October 2, 1995 resolution follows:
BANKAMERICA CORPORATION
RESOLUTION RE DIRECTOR COMPENSATION
-----------------------------------
The Board of Directors of BankAmerica Corporation (BAC) amends
the director compensation schedule to . . . to increase from 25% to
50% the required board retainer deferral into the BAC common stock
equivalent account effective October 1, 1995.
[a:\director]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS FINANCIAL DATA SCHEDULE ON FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1995 CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED
BALANCE SHEET, CONSOLIDATED STATEMENT OF OPERATIONS, AVERAGE BALANCES,
INTEREST, AND AVERAGE RATES, NONPERFORMING ASSETS, QUARTERLY CREDIT LOSS
EXPERIENCE, AND COMPOSITION OF ALLOWANCE FOR CREDIT LOSSES, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FILING.
Any item provided in the schedule, in accordance with the rules governing the
schedule, will not be subject to liability under the federal securities laws,
except to the extent that the financial statements and other information from
which the data were extracted violate the federal securities laws. Also,
pursuant to item 601(c)(1)(iv) of Regulation S-K promulgated by the Securities
and Exchange Commission (SEC), the schedule shall not be deemed filed for
purposes of Section 11 of the Securities Act of 1933, Section 18 of the Exchange
Act of 1934 and Section 323 of the Trust Indenture Act, or otherwise be subject
to the liabilities of such sections, nor shall it be deemed a part of any
registration statement to which it relates.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 12,532
<INT-BEARING-DEPOSITS> 5,832
<FED-FUNDS-SOLD> 7,040
<TRADING-ASSETS> 9,883
<INVESTMENTS-HELD-FOR-SALE> 9,979
<INVESTMENTS-CARRYING> 6,927
<INVESTMENTS-MARKET> 6,463
<LOANS> 151,212
<ALLOWANCE> 3,655
<TOTAL-ASSETS> 229,926
<DEPOSITS> 155,637
<SHORT-TERM> 20,586
<LIABILITIES-OTHER> 17,960
<LONG-TERM> 15,882<F1>
<COMMON> 600
0
2,623
<OTHER-SE> 16,638
<TOTAL-LIABILITIES-AND-EQUITY> 229,926
<INTEREST-LOAN> 9,420
<INTEREST-INVEST> 963
<INTEREST-OTHER> 1,386<F2>
<INTEREST-TOTAL> 11,769
<INTEREST-DEPOSIT> 3,616
<INTEREST-EXPENSE> 5,444
<INTEREST-INCOME-NET> 6,325
<LOAN-LOSSES> 310
<SECURITIES-GAINS> 27
<EXPENSE-OTHER> 6,035
<INCOME-PRETAX> 3,368
<INCOME-PRE-EXTRAORDINARY> 3,368
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,960
<EPS-PRIMARY> 4.75
<EPS-DILUTED> 4.72
<YIELD-ACTUAL> 4.53
<LOANS-NON> 1,855
<LOANS-PAST> 439
<LOANS-TROUBLED> 102
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,690
<CHARGE-OFFS> 680
<RECOVERIES> 322
<ALLOWANCE-CLOSE> 3,655
<ALLOWANCE-DOMESTIC> 0<F3>
<ALLOWANCE-FOREIGN> 0<F3>
<ALLOWANCE-UNALLOCATED> 996
<FN>
<F1>Includes subordinated capital notes of $605 million.
<F2>Includes interest income on trading account assets of $541 million.
<F3>These amounts are not reported in our interim filing.
</FN>
</TABLE>
